AVITA MEDICAL INC (AVH)
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12/05/2025

1

Downgrade to Speculative Buy from Add

$3.76

121.18%

Morgans lowers its target for Avita Medical to $3.76 from $4.36 and downgrades to Speculative Buy from Add, citing heightened balance sheet risk.

Although first quarter revenue grew by 67% year-on-year to US$18.5m, it was flat quarter-on-quarter and missed the broker's expectations around cash burn and progression toward breakeven.

Operating expenses were higher than forecast at -US$27.5m, and the cash balance of US$25.8m leaves less than two quarters of runway, note the analysts, raising concerns about a potential capital injection.

Cost-saving measures and new product launches are expected to support a path to breakeven by the end of 3Q25, suggests the broker, assuming 13% quarterly sales growth and a reduced cost base.

Despite recent challenges, the broker highlights the company's product pipeline and retains a positive long-term view.

FORECAST
Morgans forecasts a full year FY25 dividend of 0.00 cents and EPS of minus -32.78 cents.
Morgans forecasts a full year FY26 dividend of 0.00 cents and EPS of minus -17.16 cents.

19/05/2025

5

Downgrade to Underweight from Market Weight

$1.92

12.94%

Avita Medical's 1Q25 revenue missed Wilsons' forecast by -21%, and while the company reiterated FY25 guidance of US$100-106m, the broker isn't as optimistic and is forecasting US$92.2m.

The company announced a reduction in field sales team headcount to 82 from 108 to cut costs, but the broker isn't warming up to the strategy to redeploy them in sales from the service-based model.

The key question is whether the 2Q25 12-month revenue covenant target of US$78m will be met. The broker's US$79.4m forecast suggests it will, but it comes with a caution the venture debt lender may be less tolerant of another covenant miss.

Rating downgraded to Underweight from Market Weight. Target cut to $1.92 from $3.20.

FORECAST
Wilsons forecasts a full year FY25 dividend of 0.00 cents and EPS of minus -28.30 cents.
Wilsons forecasts a full year FY26 dividend of 0.00 cents and EPS of minus -16.08 cents.