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Investing.com - BTIG downgraded Avita Medical Ltd . (NASDAQ:RCEL) from Neutral to Sell and established a $3.00 price target, citing reimbursement challenges and missed financial targets. The stock, which has declined nearly 58% year-to-date and currently trades at $5.38, is considered undervalued according to InvestingPro analysis.
The downgrade follows what BTIG described as "another missed quarter," noting that Avita has reduced guidance in five of the last seven quarters and missed top-line expectations in the past three quarters. The firm pointed to significant challenges in both cash position and commercial execution. Despite these challenges, InvestingPro data shows the company maintained 41.35% revenue growth in the last twelve months, with 8 additional key metrics available to subscribers.
A key issue identified is that Medicare Administrative Contractors (MACs) have not been paying reimbursements to healthcare providers for Avita’s RECELL product since January 2025, despite submitted claims. According to BTIG, management was aware of this issue in March 2025 but only reduced guidance after second-quarter 2025 results.
BTIG reports demand for RECELL has dropped approximately 20% in the first half of 2025, with deterioration occurring month over month. The firm expects continued negative impact in the second half of 2025 as providers avoid reimbursement risks.
The research firm also expressed concern about Avita’s limited cash position of approximately $15.7 million, current operating cash burn, need for additional capital, and restrictions on share issuance, which BTIG believes "exacerbates the downside risk as the company works to remain solvent." According to InvestingPro data, while the company maintains a current ratio of 2.09, indicating sufficient liquid assets to meet short-term obligations, its negative free cash flow of -$46.63 million highlights ongoing operational challenges.
In other recent news, Avita Medical (TASE:BLWV) has reported its financial results for the first quarter of fiscal year 2025, revealing a net loss per share of $0.53, which missed analysts’ expectations of a $0.32 loss. The company’s revenue also fell short of projections, coming in at $18.5 million compared to the anticipated $20.75 million, although it represented a year-over-year growth of approximately 67%. This growth was attributed to increased penetration within existing customer accounts and the acquisition of new accounts for treating full-thickness skin defects. Despite these financial shortfalls, Cantor Fitzgerald maintained its Overweight rating on Avita Medical with a $19.00 price target. This endorsement followed the release of a clinical publication highlighting the effectiveness of Avita’s Cohealyx™, a collagen-based dermal matrix for wound treatment. The study, published in the Journal of Surgery, demonstrated that Cohealyx™ could significantly accelerate wound bed vascularization and readiness for autografting. The product was shown to prepare wounds for autografts within 5-10 days, improving over the standard two to four weeks required by conventional dermal matrices. These developments reflect ongoing confidence from analysts at Cantor Fitzgerald despite recent earnings misses.
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