On Wednesday, Lake Street Capital Markets adjusted its outlook on shares of Avita Medical Ltd . (NASDAQ:RCEL), reducing the price target to $14 from the previous $20, while still maintaining a Buy rating on the company's shares.
The revision follows Avita Medical (TASE:PMCN)'s reported revenue shortfall for the fourth quarter, which did not align with the positive trajectory and significant achievements the company had been experiencing. According to InvestingPro data, the company, currently valued at $371 million, has shown strong revenue growth of 32% over the last twelve months despite recent challenges.
The analyst from Lake Street, Brooks O'Neil, expressed disappointment in the fourth quarter's revenue figures but noted the company's recent milestones. Avita Medical received FDA approval in December for RECELL GO mini and FDA clearance for Cohealyx.
Both products are anticipated to be key drivers in the company's revenue growth for 2025. The full commercial launch of Cohealyx is expected in the second quarter of 2025, and it is projected to triple the addressable market for burns treatment. InvestingPro analysis indicates the company maintains a strong current ratio of 3.73, suggesting adequate liquidity to support its growth initiatives.
Lake Street's analysis highlighted Avita's efforts in expanding its product portfolio centered around RECELL, which is believed to contribute to growth and market adoption in the coming year. Despite a nearly 22% drop in share price during after-hours trading to around $11, Lake Street remains optimistic about Avita's potential for significant developments throughout 2025.
The analyst emphasized the importance of execution for Avita Medical as the company aims to enhance shareholder value. The maintained Buy rating reflects the firm's confidence in Avita's prospects, even as the price target was adjusted to reflect the recent financial results and market response.
In other recent news, Avita Medical has seen significant developments. D. Boral (OTC:BOALY) Capital initiated coverage on Avita Medical with a Buy rating, citing strong growth potential driven by its innovative tissue regeneration technology, Recell. This platform has demonstrated encouraging outcomes in clinical trials across various soft tissue and skin conditions.
Avita Medical has reported a significant 32.24% revenue growth and a strong gross profit margin of 85.66% in the last twelve months, primarily due to its market penetration in the United States.
The FDA has recently approved Avita Medical's RECELL GO Mini, a device designed for treating smaller wounds. This approval is anticipated to expand Avita Medical's market reach within its full thickness skin defect indication. Following this approval, Cantor Fitzgerald reaffirmed its Overweight rating for the company.
In the company's Third Quarter 2024 Earnings Call, Avita Medical announced a 29% increase in commercial revenue from the previous quarter, reaching $19.5 million, indicating a robust growth of 44% year-over-year. Despite a net loss for the quarter, the company is progressing towards achieving cash flow break-even and GAAP profitability by Q3 2025. The RECELL GO platform now represents 75% of the company's revenue.
These recent developments indicate Avita Medical's continued strides in the healthcare sector, with the company poised to introduce the RECELL GO Mini across relevant medical centers during the first quarter of 2025. This move is seen as a step towards solidifying Avita Medical's presence in the wound care market and expanding its customer base.
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