Bitcoin’s price rise in 2020 may have increased its appeal among some investors. They may feel that it has momentum and could be a sound means of improving their retirement prospects.

However, the virtual currency carries significant risks that may derail its future performance. As such, following Warren Buffett’s tried-and-tested method of buying cheap shares in high-quality companies could be a less risky, and more profitable, means of planning for retirement.

Bitcoin’s major risks

Bitcoin may have made strong gains in 2020, but it continues to face significant risks. They include the fact that it has no fundamentals. Unlike shares, which have earnings and assets from which an investor can deduce their intrinsic value, the virtual currency’s price level is solely dependent on investor sentiment. As a result, its price can be volatile and susceptible to large movements without clear reason.

Since it has no fundamentals, investors cannot deduce whether its gains in 2020 mean that it is overvalued, fairly valued or undervalued. Buying any asset without a margin of safety versus its intrinsic value is likely to pose significant risks. It can mean disappointing returns, since investors may have already factored in a positive outlook.

Furthermore, Bitcoin has a limited size that may restrict its capacity to ultimately replace traditional currencies. Alongside its lack of infrastructure, this may mean that it has less real-world value than investors are currently anticipating. The end result could be that its price suffers, since investor expectations may not be met over the long run.

Following Warren Buffett in buying cheap shares

While Bitcoin has risen significantly in recent months, there are still a number of cheap shares that could deliver strong returns in the coming years. Many sectors remain out-of-favour with investors. In many cases this could be because of short-term challenges that gradually give way to more prosperous operating environments. This could mean there are a number of undervalued shares available to buy today in a wide range of industries.

Warren Buffett has become one of the wealthiest people on earth through simply buying attractive companies when they trade at low prices. As such, investors who are seeking to build a retirement portfolio can follow his method today to capitalise on a likely long-term stock market rally over the coming years.

Clearly, there are likely to be periods of volatility and uncertainty in 2021 that may mean Bitcoin outperforms shares at times in the short run. However, the track record of the stock market shows that high single-digit annual returns are very achievable from holding a diverse portfolio of shares.

And, with many attractive companies trading at cheap prices today, there may be opportunities to outperform the stock market as it recovers from the effects of the 2020 stock market crash.

More reading

• Why the Meridian (ASX:MEZ) share price is dropping lower today
• 3 ASX 200 shares to buy right now
• Top brokers name 3 ASX shares to sell today
• Why the Envirosuite (ASX: EVS) share price bumped up 6% today
• Why BrainChip, Pilbara Minerals, Premier Investments, & Tyro shares are dropping lower

Motley Fool contributor Peter Stephens 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 Bruce Jackson.

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The S&P/ASX 200 Index (ASX: XJO) is home to 200 of the largest companies on the Australian share market.

While not all of these shares are necessarily in the buy zone, a good number jump out as potential options.

Three that come highly rated are listed below. Here’s why they could be in the buy zone:

Altium Limited (ASX: ALU)

Altium is a leading printed circuit board (PCB) design software provider. These PCBs are found inside almost all electronic devices. Given the proliferation of electronic devices due to the artificial intelligence and internet of things markets, demand for its software platform has been very strong in recent years. And while the pandemic is having an impact on demand right now, management remains very positive on its long term growth trajectory.

Credit Suisse is a fan of the company and this week put an outperform rating and $35.00 price target on its shares.

Aristocrat Leisure Limited (ASX: ALL)

Another ASX 200 share to look at is Aristocrat Leisure. It is one of the world’s leading gaming technology companies and responsible for many of the most popular poker machines around. In addition to this, the company has a thriving digital segment which creates a wide range of games such as Raid: Shadow Legends, Toy Story Drop, and Big Fish Casino. This segment has millions of daily users generating recurring revenues. And with new releases strengthening its offering and casinos reopening, the company looks well-positioned for growth.

Citi notes that 2020 has been a difficult year, but believes the company will bounce back strongly and grow nicely over the medium term. The broker has a buy rating and $40.60 price target on its shares.

REA Group Limited (ASX: REA)

A final ASX 200 share to get better acquainted with is REA Group. It is the leading real estate listings company in the Australian market and owns several equivalents in international markets. FY 2020 was a difficult year because of the pandemic, but thanks to its excellent costs control, the company delivered a robust full year result. Pleasingly, it has started FY 2021 strongly and looks well-placed to accelerate its growth as trading conditions improve.

Morgan Stanley is positive on the company and has an overweight rating and $150.00 price target on its shares.

More reading

• Here’s what this leading broker thinks about the Altium (ASX:ALU) share price
• 5 things to watch on the ASX 200 on Thursday
• ASX 200 rises 0.1%
• Top brokers name 3 ASX shares to buy today
• ASX 200 down 0.3%: Altium sinks, Premier Investments rockets, energy shares rise

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 recommends Altium. The Motley Fool Australia has recommended REA Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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On Wednesday I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three ASX shares that have just been given sell ratings by brokers are listed below. Here’s why these brokers are bearish on them:

Adbri Ltd (ASX: ABC)

According to a note out of Morgan Stanley, its analysts have downgraded this building products company’s shares to an underweight rating and cut the price target on them to $3.30. The broker believes the company’s shares are fully valued given its reasonably subdued growth outlook. In light of this, it feels there are better options elsewhere in the sector for investors right now. The Adbri share price has tumbled below this price target to $3.11 on Thursday afternoon.

Premier Investments Limited (ASX: PMV)

Analysts at Goldman Sachs have retained their sell rating but lifted their price target on this retail conglomerate’s shares to $20.80. According to the note, the broker doesn’t expect Premier Investments’ strong form to last beyond FY 2021. Goldman is forecasting earnings per share of $1.40 in FY 2021 but then $1.03 in FY 2022 and $1.09 in FY 2023. As a result of this, it feels its shares are expensive compared to peers based on its forwards earnings estimates. The Premier Investments share price is down to $24.63 this afternoon.

Reliance Worldwide Corporation Ltd (ASX: RWC)

Another note out of Morgan Stanley reveals that its analysts have retained their underweight rating and cut the price target on this plumbing parts company’s shares to $3.70. According to the note, the broker believes that risks are to the downside for its earnings. This is due to COVID lockdowns impacting demand and an increase in copper prices. The Reliance share price is trading at $3.86 on Thursday.

More reading

• Why BrainChip, Pilbara Minerals, Premier Investments, & Tyro shares are dropping lower
• Is it too late to buy Premier Investments (ASX:PMV) shares?
• 5 things to watch on the ASX 200 on Thursday
• ASX 200 rises 0.1%
• The Accent Group (ASX:AX1) share price just got hit by a broker downgrade

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 Reliance Worldwide Limited. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. The Motley Fool Australia has recommended Reliance Worldwide Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Envirosuite Ltd (ASX: EVS) share price launched up almost 6% in opening trade today following release of the company’s second-quarter results. Its shares have since retreated to 17.5 cents at the time of writing, up 2.94%.

Despite gaining more than 13% over the past six months, the Envirosuite share price has dropped roughly 37% in the 12 months since January 2020.

Why the Envirosuite share price is lifting today

Envirosuite, which develops environmental management technology solutions, listed four key highlights in its quarterly sales update. The company reported $1.1 million in new annual recurring revenue (AAR) during the quarter, having hooked 19 new clients. Envirosuite renewed 37 contracts totalling $2.7 million.

The company earned $3 million in new non-recurring revenue and claims to have $12 million of new APR in unweighted pipeline looking ahead to quarter three. According to Envirosuite, this works out to more than 150 opportunities being pursued.

Other quarterly highlights include a three-year construction deal in the UK, two new airport wins in Europe and a new contract with one of Australia’s largest container ports.  

One billion shares outstanding

With one billion shares outstanding, the Institutional Brokers Estimates System (IBES) rates Envirosuite a buy. Curiously, the same Envirosuite share price report scored the company as a 2 out of 10 with a negative outlook. 

This score is calculated by evaluating a company’s earnings, fundamentals, relative valuation, risk and price momentum.

The major difference between these two perspectives is that the first one is from a human analyst, the second born out of artificial intelligence (AI).

The Envirosuite market cap presently sits at 174.4 million.

What did the CEO say?

Commenting on the quarterly performance, Envirosuite CEO Peter White said:

EVS continues to build out its product portfolio across air, water and noise as it creates world-leading predictive solutions across wastewater and water, mining, airports and industrial customers.

Envirosuite’s focus for 2021 continues to be on transforming our business model to produce higher gross margins through incorporating an ever increasing level of software and automation in our solutions and developing higher value products and outcomes for our customers as we cement our leadership in the environmental intelligence market.

More reading

• Why BrainChip, Pilbara Minerals, Premier Investments, & Tyro shares are dropping lower
• Why the Orthocell (ASX:OCC) share price is rocketing 23% higher
• Why the Ampol (ASX:ALD) share price is flat today
• Could this be why Afterpay (ASX:APT) and other BNPL shares are soaring today?
• Why this top broker thinks the Telstra (ASX:TLS) share price could surge ~40%

Motley Fool contributor Gretchen Kennedy 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 Bruce Jackson.

The post Why the Envirosuite (ASX: EVS) share price bumped up 6% today appeared first on The Motley Fool Australia.

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In afternoon trade the S&P/ASX 200 Index (ASX: XJO) has fought back from a soft start and is charging higher. At the time of writing, the benchmark index is up 0.35% to 6,710.8 points.

Four shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:

BrainChip Holdings Ltd (ASX: BRN)

The BrainChip share price is down 6% to 53.7 cents despite there being no news out of the artificial intelligence technology company. However, with its shares rocketing 18% on no news on Friday, it appears as though profit taking has been weighing on its shares this week. The BrainChip share price is now down 18% from Monday’s high.

Pilbara Minerals Ltd (ASX: PLS)

The Pilbara Minerals share price is down almost 2% to $1.13. This morning the lithium miner announced the completion of its retail entitlement offer. Pilbara Minerals raised $60.6 million from the offer, bringing the total raised from its capital raising to $240.2 million. These funds are to be used to acquire the Pilgangoora Lithium Project in Western Australia.

Premier Investments Limited (ASX: PMV)

The Premier Investments share price is down close to 3% to $24.67. This appears to have been driven by profit taking and a couple of bearish broker notes. In respect to the latter, this morning Goldman Sachs retained its sell rating and put a $20.80 price target on its shares. Elsewhere, UBS has downgraded the retail conglomerate’s shares to a neutral rating with a $24.50 price target. Both brokers expect a strong result in FY 2021, but then a sharp decline in earnings in FY 2022.

Tyro Payments Ltd (ASX: TYR)

The Tyro share price has fallen almost 7% to $2.64. This morning Goldman Sachs retained its neutral rating but cut its price target on the payments company’s shares to $3.15. The broker has concerns over the outage that has been impacting some of Tyro’s customers since last week. It fears these temporary terminal connectivity issues could weigh on medium-term growth and possibly lead to compensation claims.

More reading

• Here’s why the Pilbara (ASX:PLS) share price is on watch today
• Top fund managers reveal 3 top ASX shares to buy for 2021
• Is it too late to buy Premier Investments (ASX:PMV) shares?
• 5 things to watch on the ASX 200 on Thursday
• ASX 200 rises 0.1%

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 Tyro Payments. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Orthocell Ltd (ASX: OCC) share price is one of the best performers on the market today. This comes after the company announced that it has received regulatory approval for its flagship product, CelGro.

At the time of writing, the regenerative medicine company’s shares are up 23.91% to 57 cents.

What’s pushing the Orthocell share price higher?

The Orthocell share price is soaring higher today, with investors fighting to get a hold of its shares after this most recent announcement.

Orthocell advised it has achieved 510(k) clearance from the United States Food and Drug Administration (FDA) to market and supply its CelGro device.

CelGro is a collagen scaffold that supports tissue reconstruction and repair, with a wide range of uses in orthopaedics, general, gynaecology and ENT surgeries.

In the United States however, CelGro will be used for dental bone and tissue regenerations procedures. This includes dental bone repairs, growth around dental implants in extraction sockets, and tissue regeneration in intrabony defects.

The approved clearance will see Orthocell supply Striate+ for the United States dental market. Striate+, formerly branded as CelGro Dental, is manufactured in Australia, using the company’s SMRT technology.

Following the milestone achievement, Orthocell will now seek negotiations with United States dental companies for marketing and distribution rights. Orthocell highlighted that after this recent success, it is confident of securing a distribution partner to bring the product to market.

Orthocell stated that CelGro can be further developed to service the peripheral nerve repair market. It is estimated that this sector alone is worth more than US$7.5 billion per annum, with 3 million potential CelGro procedures each year.

Management commentary

Orthocell managing director Mr Paul Anderson welcomed the positive outcome, saying:

US approval has come sooner than expected and is a significant inflection point for our Company. I am excited by this strategic milestone and the positive step it represents on our pathway to partnering Striate+ in dental GBR indications. I look forward to working with our leading dental surgeons to introduce the new global brand, Striate+, previously branded as CelGro Dental, and to make a meaningful impact in the US market.

More reading

• Why the Orthocell (ASX:OCC) share price has popped 6% today
• Why the Orthocell (ASX:OCC) share price is edging higher today

Motley Fool contributor Aaron Teboneras 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 Bruce Jackson.

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The Ampol Ltd (ASX: ALD) share price has barely budged today after the company released its fourth-quarter numbers. Currently, shares are trading slightly higher at $28.67, up 0.42%.

Overall, the Ampol share price is down 19.71% in the last year, while the S&P/ASX 200 Index (ASX: XJO) is down 4.41% over the same period of time.

What’s affecting the Ampol share price?

This morning, Ampol released the Lytton refinery unaudited results for the fourth quarter of FY20. The Lytton refinery started operating in 1965 and is the country’s largest oil refinery. Its fate, however, has been called into question since the COVID-19 pandemic.

The good news for Ampol

In the fourth quarter, Lytton’s earnings before interest and tax (EBIT) showed a loss of $4 million, rounding out the full-year results for the refinery to a loss of $145 million.

The good news is this result exceeded analyst expectations by $20 million. Originally the consensus reflected a $165 million loss.

And not so good news…

The fact is that it’s still a substantial loss and, in Ampol CEO Matt Halliday’s own words, “unacceptable”.

As today’s update outlined, ongoing economic disruptions in 2021 have resulted in continued uncertainty.

The impacts on both international and domestic demand, in tandem with the strong Australian dollar, have tightened refining margins even further. Today’s update unveiled the refiner’s margins slipping to US$5.13 per barrel, compared to the US$9.08 per barrel refiner margin in the first half of 2020.

Meanwhile, the Lytton refinery continues to undergo its comprehensive review as Ampol works to determine the best course of action. The review is expected to be completed in the first half of 2021.

Lastly, Ampol disclosed that its net debt at the end of December 2020, excluding lease liabilities, was $434 million.

The future of Lytton

As previously mentioned, all options are on the table for the refinery. The Federal Government’s $2.5 billion fuel security package, proposed late last year, did not tickle the fancy of Mr Halliday, who told the Australian Financial Review:

We appreciate the intent of the proposed support package, but we need to be realistic about the extreme structural challenges that are facing the asset up at Lytton. We need to take control of our own destiny and focus on how we are going to deliver value for our shareholders.

If Ampol does decide to close the Lytton refinery, it would come after BP’s closing of the Kwinana refinery in Western Australia. Adding to the other 3 refineries that have shut down in Australia in the last 8 years.

Based on the Ampol share price at the time of writing, its market capitalisation is now $7.13 billion.

More reading

• Could this be why Afterpay (ASX:APT) and other BNPL shares are soaring today?
• Why this top broker thinks the Telstra (ASX:TLS) share price could surge ~40%
• Why this broker sees little upside to the Polynovo (ASX:PNV) share price right now
• BHP, Rio Tinto’s new copper mine under threat
• ASX 200 up 0.3%: Afterpay surges, Pro Medicus rockets on $40m contract, Whitehaven rises

Motley Fool contributor Mitchell Lawler 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 Bruce Jackson.

The post Why the Ampol (ASX:ALD) share price is flat today appeared first on The Motley Fool Australia.

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ASX buy now pay, later (BNPL) shares have pushed higher across the board on Thursday. At the time of writing, the Afterpay Ltd (ASX: APT) share price is 7.37% higher, eyeing its previous record all-time high of $123.40 and Zip Co Ltd (ASX: Z1P) shareholders can breathe a sigh of relief as its shares are 4.4% higher. 

Elsewhere, the Sezzle Inc (ASX: SZL) share price is 6.62% higher following its record fourth quarter results announced on 12 January 2021. 

The Laybuy Holdings Ltd (ASX: LBY) share price is 8% higher after announcing record third quarter results today. Some laggards include Splitit Ltd (ASX: SPT), Openpay Group Ltd (ASX: OPY) and Humm Group Ltd (ASX: HUM), which haven’t seen the same level of gains.  

While ASX BNPL shares are grinding higher, a new US-based BNPL initial public offering (IPO) soared on its debut yesterday, demonstrating investor appetite for fintech IPOs and BNPL shares. 

US BNPL Affirm doubles on debut 

Affirm is a US-based BNPL player with a classic product that allows shoppers to pay for purchases in fixed amounts over time without deferred interest, hidden fees or penalties. In FY20, the company recorded 6.2 million customers, 6,500 merchants and US$4.6 billion in gross merchandise volume. 

The company raised $1.2 billion in an initial public offering at an offer price of $49 per share. Its shares surged to $97.24 at the market close on Wednesday, an almost 100% gain. 

The surging Affirm share price has ballooned its market capitalisation to around US$23 billion on FY20 revenues of US$509.5 million. This values the company at approximately 45 times FY20 revenue. 

What about ASX BNPL shares? 

If we looking at the major ASX BNPL shares with operations in the US, it’s the Afterpay share price that has surged the most today.

At its current market cap of $31 billion with FY20 revenue of $502.7 million, the company appears to be more expensive, trading at a revenue multiple of 62. That said, the Afterpay share price delivered some of the best returns in 2020. The company has expressed its intention to maintain its growth trajectory by expanding into the rest of Europe and develop a strategy for the South Asia market. 

In comparison, the Zip share price has seemingly gone nowhere recently. The company currently has a market cap of $3 billion with FY20 revenue sitting at $161 million. It trades towards the lower end of the spectrum with a FY20 revenue multiple of just 18.

More reading

• ASX 200 up 0.3%: Afterpay surges, Pro Medicus rockets on $40m contract, Whitehaven rises
• Why Afterpay, Australian Ethical, Pro Medicus, & Sezzle shares are charging higher
• Why the Laybuy (ASX:LBY) share price is surging higher today
• 4 ways to lose all your money
• 5 things to watch on the ASX 200 on Thursday

Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Humm Group Limited and Sezzle Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Telstra Corporation Ltd (ASX: TLS) share price has been a disappointing performer but at least one broker sees big potential upside.

The TLS share price slumped by nearly 20% over the past year and is trading at $3.08 at the time of writing.

That’s significantly worse than the circa 3% dip in the S&P/ASX 200 Index (Index:^AXJO). Other ASX telecommunications stocks are also miles ahead.

Can the Telstra share price play catch-up in 2021?

The Amaysim Australia Ltd (ASX: AYS) share price doubled, Vocus Group Ltd (ASX: VOC) share price rallied 28% and the TPG Telecom Ltd (ASX: TPG) share price added 1%.

But the lagging Telstra share price could be worth a lot more than what the market is expecting, according to Macquarie Group Ltd (ASX: MQG).

This is because Telstra plans to split its assets into separate entities could release significant value. Specifically, the move to spin off its mobile towers division could attract a high valuation.

Unlocking value via mobile divestment

This division, affectionately termed TowerCo, is leveraged to the 5G opportunity. Macquarie thinks the spin-off could either come via an initial public offer (IPO) where half of the business is sold to ASX investors, or through a 50% sale to a partner.

“We derive an EV of ~$5-6bn representing a 25-30x FY1 EBITDA multiple,” said the broker.

“We believe listed markets would pay ~25x EV/EBITDA forTowerCo whereas an unlisted Australian investor could pay up to 34x given value attributed towards franking credits and a lower return hurdle (equity IRR assumed: 7%).”

Fibre asset has big upside too

As for Telstra’s fibre infrastructure asset, these could be worth around 14 times earnings before interest, tax, depreciation and amortisation (EBITDA). Macquarie noted that other listed fibre companies trade at between 12 and 14 times EBITDA.

What’s more, the multiples paid in past transactions range between 10 and 20 times with the average at 14 times.

“While the path to crystalising is uncertain, we note there is material upside if these assets are marked to market,” noted Macquarie.

“We estimate a ‘fair’ value release valuation of ~$3.95ps, representing ~30% upside to the current share price.”

What the Telstra share price could be worth

The upside could be much more significant under the broker’s bull case scenario. Macquarie estimated that the divestments could value the TLS share price as much as $4.29. That’s a 39.3% increase to the current Telstra share price excluding dividends.

Under Macquarie’s bear case scenario, the Telstra share price would be only worth $2.69 a pop, or a 12.7% decline.

Given the risk-reward, the Telstra share price could be a worthwhile investment. Macquarie is recommending the stock as “outperform” with a price target of $4 a share.

More reading

• ASX 200 up 0.3%: Afterpay surges, Pro Medicus rockets on $40m contract, Whitehaven rises
• Are ASX 200 shares set to climb 15% higher in 2021?
• 2 highly rated ASX dividend shares to buy
• 5 things to watch on the ASX 200 on Thursday
• ASX 200 rises 0.1%

Motley Fool contributor Brendon Lau owns shares of Telstra Limited. Connect with  me on Twitter @brenlau.

The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Polynovo Ltd (ASX: PNV) share price was one of the best performing ASX 200 healthcare shares in 2020, running from $1.97 to $3.88.

But when the company’s share price started to turn in the wrong direction, it fell and it fell fast. 

It wasn’t just the trading update

Polynovo released a trading update on 12 January 2021 which saw its shares crash 13% on the day.

But it wasn’t just the trading update to point the finger at for Polynovo’s significant share price decline. Its shares had already slumped from $3.88 to $3.39 or 12% before the announcement, almost a tell tale of the bad news brewing. 

Furthermore, the S&P/ASX 200 Health Care (ASX: XHJ) has also fallen 4.3% in the new year. Adding further insult to injury for the healthcare sector.  

Bell Potter disappointed with first half FY21 trading update 

Bell Potter reports: “Polynovo announced a relatively disappointing trading update, with 1H FY21 sales growth of 31% vs the pcp well below our forecasts, consensus and management expectations”.

In the company’s November 2020 annual general meeting, Polynovo’s NovoSorb BTM product experienced very strong growth from $9.3 million in FY19 to $19.06 million in FY20.

Polynovo managing director Paul Brennan said at the time the company would “continue to harness this momentum to double our revenues again in FY21”.

Bell Potter’s report notes that “expectations were broadly that sales would double in FY21 vs FY20”.

It noted that management also “tempered expectations around growth for the second half given the uncertainty in patient volumes”. 

The broker did highlight some small positives including management’s strong update on new accounts, with successful customers additions and ongoing efforts to drive growth with integrated distribution networks. Those new customers may start to become more active users of Novosorb BTM in the coming months, especially if patient volumes recover well in a post-vaccine environment. 

Overall, Bell Potter reduced its Polynovo share price target from $3.20 to $2.90 with a hold rating. The Polynovo share price is trading up 4.48% at $2.80 at the time of writing. 

More reading

• ASX 200 rises 0.1%
• ASX 200 down 0.3%: Altium sinks, Premier Investments rockets, energy shares rise
• Why Afterpay, Altium, Mesoblast, & PolyNovo shares are dropping lower
• ASX 200 drops lower
• ASX 200 up 0.4%: Altium disappoints, ARB impresses, Mesoblast charges higher

Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of 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.

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