TD Cowen has revised its outlook. Avita Medical Co., Ltd. (NASDAQ:) is a company that specializes in regenerative medicine. The firm lowered its price target for the company to $15.00 from $25.00 previously, but maintained its buy rating.
The decision comes following Avita’s second-quarter sales report, which showed revenue of $15.1 million, in line with the company’s guidance and representing growth of 29%.
The price target revision comes at the same time that Avita announced it was lowering its revenue outlook for this year. The company adjusted its expected revenue range to $68 million to $70 million, down from its previous forecast of $78.5 million to $84.5 million. The change is primarily due to the slowing pace of conversion to vacuum assisted closures (VACs), noted earlier this year.
Despite the guidance cut, TD Cowen remains optimistic about Avita’s future, as it believes the company remains on a promising growth trajectory.
Avita has received FDA approval for its RECELL GO™ system, an advanced wound treatment device designed to improve the healing process using a patient’s own skin cells.
The device is an automated version of the previous RECELL system for skin sampling and is now being used for the first time in clinical settings.
The company also reported first-quarter commercial revenue of $11.1 million, up 5.8% year over year but below expected targets. Despite the net loss of $18.7 million, Avita maintained a strong gross margin of 86.4%. Analyst firms BTIG and Bank of America Securities maintain neutral and buy stances on the company, respectively.
InvestingPro Insights
Given Avita Medical Ltd.’s (NASDAQ:RCEL) recent developments, a closer look at key financial metrics and expert analysis provides additional context for investors. According to data from InvestingPro, Avita Medical boasts robust gross margins of approximately 85% over the trailing 12 months through Q1 2024, highlighting its strong ability to control costs relative to revenue. However, the company’s operating margin for the same period was -98.35%, reflecting significant operational costs that exceed gross profits.
According to InvestingPro’s tips on Avita Medical, the company has more cash than debt, which is a positive sign of financial stability, but investors should keep a close eye on it as cash is dwindling rapidly. Additionally, the stock has experienced significant volatility, with a total price return of -55.94% over the past six months, indicating potential risk for short-term investors. It is important to note that the company does not pay a dividend, which may impact the investment strategy of income-focused shareholders.
For those who would like to learn more about Avita Medical’s financial health and share price movement, InvestingPro offers a comprehensive set of additional tips and analysis. There are currently a total of 9 InvestingPro tips on Avita Medical that can provide further insight into the company’s financial health and share price movement.
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