This report is an updated version of the report published on 17 February 2025 at 12:22 PM AEDT.

AVITA Medical, Inc. (ASX: AVH) 

AVITA Medical, Inc. (ASX: AVH) is a regenerative medicine company aiming to revolutionize wound care management and skin restoration with its innovative devices. Its portfolio includes the FDA-approved RECELL® System, designed for treating thermal burn wounds, full-thickness skin defects, and repigmenting stable depigmented vitiligo lesions.

Recommendation Rationale – SELL at AUD 3.380

• Technical Commentary: On the daily chart, AVH’s stock price is undergoing a downtrend characterized by lower highs and lower lows, indicating a negative bias. Moreover, price is approaching the trend-following indicator 50-day SMA from the below, adding further evidence to the previous observation. Prices are trading between its previous peak and trough, which might function as resistance and support levels for the stock, respectively.
• Trading Around Resistance:AVH’s share price surpassed its R1 level recommended on 14 February 2025.
• Increase in Losses:The net loss after tax increased 75% YoY to USD 61.84mn in FY24. AVH’s losses in FY24 could present significant challenges to the company’s overall operations and potentially impact its margins moving forward.
• Emerging Risks: As a company operating in the healthcare sector, AVITA is subject to stringent regulatory requirements. Any changes in regulations or failure to comply with existing regulations could adversely affect its operations. The demand for AVITA's wound care management and skin restoration devices showed unexpected weakness in 4QFY24. This fluctuation in market demand can affect the company's financial stability.

AVH Daily Chart

Valuation Methodology: EV/Sales Approach (FY Dec'25E) (Illustrative)

Stock might trade at a slight discount to its peers, considering the increasing losses, fluctuation in market demand, stringent regulatory requirements, etc. Peers include: Aroa Biosurgery Ltd (ASX: ARX), Tissue Repair Ltd (ASX: TRP), and Ramsay Health Care Ltd (ASX: RHC) have been considered. Considering that the stock is approaching its R2 level, rally in share price, current trading level, and risks associated, the share price can face consolidation at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current price of AUD 3.38 (as of 17 February 2025, at 11:20 AM AEDT).

Note: This report may be updated with details around fundamental and technical analysis, price/ chart in due course, as appropriate.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 17 February 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.    

Note 4: Kalkine reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 25-30 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.