Why the PolyNovo (ASX:PNV) share price is sinking 6% lower on Thursday

This medical device company's shares are under pressure today…

| More on:
dissapointed man at falling share price

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Polynovo Ltd (ASX: PNV) share price has been the worst performer on the S&P/ASX 200 Index (ASX: XJO) on Thursday.

At the time of writing, the medical device company's shares are down 6% to $2.16.

This leaves the PolyNovo share price trading within sight of its 52-week low of $1.98.

Why is the PolyNovo share price is tumbling?

Investors have been selling down the PolyNovo share price after analysts at Bell Potter responded negatively to yesterday's sales update.

According to the note, the broker has held firm with its hold rating but cut its price target down to $2.65.

Bell Potter made the move after the company's sales update fell short of its expectations. PolyNovo reported product revenue growth of 34% in FY 2021 to ~$25.6 million, whereas Bell Potter was expecting $29.1 million.

What did Bell Potter say?

Bell Potter notes that PolyNovo has now fallen short of expectations for two consecutive halves.

It commented: "Today's announcement came as a 13% miss vs our expectations—we expected COVID recovery tailwinds would make an impact on sales in the 2H. Although we view the quantum of sales growth as positive and acceptable, much loftier market expectations have not been met this and last half, which has contributed to recent downward pressure on the stock."

In light of this, the broker has revised its revenue forecasts lower and adjusted its target on the PolyNovo share price accordingly.

The broker concluded: "Maintaining our HOLD rating with a reduced price target of $2.65/sh (from $2.75/share) on reduced FY22-24 revenue forecasts. PNV continues to trade at a significant premium to domestic and international wound care and MedTech peers."

Bell Potter suggests that investors wait for PolyNovo's "full year result in late August for additional detail, especially around new account additions, momentum with group purchasing organizations, and audited revenue figures."

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended POLYNOVO FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Fallers

A businesswoman exhales a deep sigh after receiving bad news, and gets on with it.
Share Fallers

Why Bell Financial, IPD, Megaport, and Resolute Mining shares are falling today

These shares are starting the week in the red. But why?

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why Megaport, Pilbara Minerals, Vysarn, and WiseTech shares are falling today

These shares are ending the week in the red. But why?

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Accent, Sayona Mining, Web Travel, and Weebit Nano shares are dropping today

These shares are having a tough time on Thursday. Why are they being sold off?

Read more »

A smartly-dressed man screams to the sky in a trendy office.
Share Fallers

Why Appen, DroneShield, PWR, and Webjet shares are sinking today

These shares are having a tough time on hump day. But why?

Read more »

a car driver sits up and looks alert with wide eyes and an expression of concentration while he holds the wheel of a car.
Share Fallers

Why this ASX All Ordinaries stock just crashed 24%!

Investors are punishing the ASX All Ords company today. Let’s find out why.

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why Elders, KMD, Lovisa, and Telix shares are dropping today

These shares are missing out on the good times on Tuesday. But why?

Read more »

A woman with short brown hair and wearing a yellow top looks at the camera with a puzzled and shocked look on her face as the Westpac share price goes down for no reason today
Share Fallers

Why Life360, Lovisa, NAB, and Resolute shares are falling today

These shares are starting the week in the red. But why?

Read more »

A young woman holds an open book over her head with a round mouthed expression as if to say oops as she looks at her computer screen in a home office setting with a plant on the desk and shelves of books in the background.
Healthcare Shares

This ASX All Ords share is diving 18% as inflation pain draws blood

This healthcare company delivered a trading update at its annual general meeting today.

Read more »