Considering what PolyNovo Ltd (ASX: PNV) recently revealed in its full-year trading update, it might come as a surprise that the company's shares are trading near their 12-month lows.
The analysts at Macquarie certainly think there's more value in the shares than is reflected in the current share price, recently issuing a new research report with a bullish share price target. We'll get to that shortly.
First, let's see what the company reported.
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Surging revenue with strong US growth
PolyNovo, which develops and sells innovative wound dressings, said recently that its revenue for FY26 was up 20.3% to $150 million.
The company's operating cash flow was up 674.2% to $24 million, and free cash flow improved from negative $10.1 million to $10.4 million.
On the operational front, the company said:
Construction of PolyNovo's new manufacturing facility is complete, and validation activities are progressing as planned. Capital expenditure requirements are largely complete, with $1.5 million outstanding for additional machinery which is expected to be paid for in the first half of FY27.
The company added that with respect to a fire at its R&D facility in late 2025, it had received $3.5 million from insurers and was working towards "recovery of remaining costs associated with the rebuild and restoration of the facility''.
PolyNovo Chief Executive Officer Bruce Peatey said:
We're pleased to have finished the financial year strongly, with record sales recorded in the U.S. in June and manufacturing production output increasing significantly compared to H1, increasing gross margin and profitability for the year and therefore an improved cash position. The competitive environment in the U.S. continues to evolve following significant shifts to the reimbursement landscape, and additionally we've experienced seasonal decline to the presentation of major burns across many direct markets. However, the performance of our products is undisputed. The strategy employed to date, leveraging our strength in major trauma and burns to drive clinician confidence elsewhere, is succeeding, as we see total revenue associated with other complex wound indications growing at a faster rate than large burns.
Mr Peatey said the company now had 100 frontline staff in the US, and demand for the company's NovoSorb product continued to grow, supported by clinical evidence.
He added that, "with expanded manufacturing capacity, new commercial opportunities and product catalysts ahead, we believe the Company enters FY27 well positioned to continue delivering sustainable growth''.
PolyNovo shares looking cheap
Macquarie said while revenue growth was strong, the numbers missed expectations.
They revised their price target for the company down from $1.75 to $1.30, still well above the 83.75 cents at the time of writing.
The stock is 35.1% lower over a 12-month period. The company is valued at $590.7 million.
