The exciting ASX small-cap with potential 75% upside that I think every investor should be watching

ASX small-cap Aroa Biosurgery (ASX: ARX) is having a breakout year. 

Aroa is a commercial-stage medical device company operating in the complex wound care and soft tissue reconstruction sector. It provides biologic medical devices through its AROA-ECM (Extracellular Matrix) platform. 

The team at Bell Potter has been covering this ASX small-cap, and sees plenty of runway for growth thanks to strong FY26 results. 

What did the company report?

Yesterday, the ASX small-cap reported for FY 26: 

• NZ$104m in total revenue, exceeding guidance of NZ$92-$100m. It was 23% higher than FY25
• Normalised EBITDA of NZ$13m. This also exceeded guidance (NZ$5-$8m). 
• NZ$10.5m operating cash flow, which was up NZ$13.1m on FY25. 
• NZ$49.5 million in Myriad product revenue (54% growth on FY25).

Looking to FY27 guidance, the company expects total revenue of NZ$115-$125 million, representing 13-23% constant-currency growth. 

Direct sales are expected to grow 24-40%, led by continued Myriad momentum and supported by the launch of Symphony. 

Commenting on AROA’s outlook for FY27, Managing Director and CEO Brian Ward said: 

FY26 was a successful year for AROA. Revenue grew 23% to NZ$103.9 million, driven by 54% growth in the Myriad portfolio, which was achieved with the same number of salespeople as the previous year, demonstrating strong operating leverage in the business. 

We expect Myriad momentum to continue, supported by deeper account penetration and higher productivity across the US direct sales team. Symphony’s value proposition is well aligned with the changing reimbursement environment, and we believe it can become an important medium-term growth catalyst.

Bell Potter pleased with results 

Following these results, the team at Bell Potter provided updated guidance on this ASX small-cap. 

The broker said Aroa delivered a very strong FY26 result, mainly driven by rapid growth in Myriad sales, which they see as the core engine of the business. 

They believe this product can continue to grow at a solid double-digit rate because it is still at an early stage relative to a very large addressable market.

They also think the company is successfully shifting toward a more scalable business model by building out its direct sales force, which is reducing reliance on its US distribution partner and should support more consistent revenue growth going forward. 

In their view, this transition is likely to continue in FY27 as ARX expands sales capacity and re-launches its Symphony product.

However, Bell Potter also expects higher costs in the near term as the company invests more heavily in sales, marketing, and hiring to support growth. This leads them to slightly lower their profit (EBITDA) forecasts, even though they are not meaningfully changing their revenue expectations.

75% upside for this ASX small-cap 

Based on this guidance, the team at Bell Potter has placed an updated price target of $1.09 on this ASX small-cap. 

From yesterday’s closing price of 62 cents per share, this indicates an upside potential of over 75%. 

The post The exciting ASX small-cap with potential 75% upside that I think every investor should be watching appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Bell has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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 Scott Phillips.