The team at Bell Potter have just released fresh analysis on ASX small-cap stock Aroa Biosurgery Limited (ASX: ARX).
It is a New Zealand-based biomedical company specialising in soft tissue regeneration. It develops, manufactures, and distributes medical and surgical products.
The company's principal market is the United States, where it markets four key products:
- Endoform
- Myriad
- OviTex
- Symphony
These products improve healing in complex wounds and soft tissue reconstruction.
It appears Bell Potter sees significant upside in this ASX small-cap stock on the back of positive 1H26 earnings.
The broker has a buy recommendation and optimistic price target, suggesting more than 20% upside.
Image source: Getty Images
What did the company report?
On Tuesday, Aroa Biosurgery released H1 FY26 Results.
This included:
- Total revenue of NZ$44.9 million (14% growth on H1 FY25)
- NZ$19.7 million in Myriad product revenue (33% growth on H1 FY25)
- NZ$19.2 million in total OviTex/OviTex PRSi product revenue (4% growth on FY25)
- Product gross margin of 85%
- Normalised EBITDA profit of NZ$1.8 million (up from NZ$1.5 million normalised EBITDA loss in H1 FY25)
FY26 Outlook
- Revenue of NZ$92-$100 million (10%-20% growth on FY25 on a constant currency basis)
- Normalised EBITDA of NZ$5-$8 million (19%-90% growth on FY25)
Commenting on AROA's H1 FY26 results, Managing Director and CEO Brian Ward said:
We are very pleased with our first half performance, delivering NZ$44.9 million in total revenue, underpinned by strong Myriad growth, and our fourth consecutive quarter of positive operating cash flow.
We reaffirm our FY26 guidance of NZ$92–100 million in revenue and NZ$5–8 million normalised EBITDA. Looking ahead to the second half of FY26, we expect new clinical publications to further validate AROA ECM's efficacy and strengthen its commercial uptake.
Reason for optimism for this ASX small-cap stock
Markets reacted positively to the results of Aroa Biosurgery yesterday.
The stock price closed almost 8% higher at $0.68.
Following the results, Bell Potter said ARX's balance sheet continues to strengthen.
We are confident regarding the ongoing performance of the Myriad sales team, while conviction levels surrounding the Tela Bio group are lower. Fortunately 2H is traditionally the stronger sales period for Tela.
The broker has a buy recommendation on this ASX small-cap stock and a price target of $0.85.
From yesterday's closing price, this indicates an upside of 25%.
Elsewhere, TradingView has a 12-month price target of $0.845 and online brokerage platform Selfwealth lists the ASX small-cap stock as undervalued by approximately 30%.
