Lake Street Capital Markets assumes coverage on Avita Medical stock with Buy rating

Investing.com - Lake Street Capital Markets has assumed coverage on Avita Medical Ltd . (NASDAQ:RCEL) with a Buy rating and a price target of $8.00 on Monday. The stock, currently trading at $4.48, has experienced significant pressure, down over 66% year-to-date according to InvestingPro data, suggesting potential opportunity as analysts see upside from current levels.

The research firm noted that Medicare Administrative Contractor (MAC) adjudications began flowing in July, with broader contractor compliance expected in the second half of 2025, suggesting the reimbursement disruption that weakened first-half performance appears on track for resolution.

Despite Avita Medical (TASE:BLWV) cutting guidance materially, the company has reiterated confidence in a second-half 2025 recovery, which Lake Street views as a prudent reset rather than a structural impairment.

Lake Street expressed conviction in Avita’s cohesive product portfolio, which now includes RECELL, Cohealyx, and PermeaDerm, addressing different stages of wound care, noting shares trade at 1.4x 2026 EV/S compared to high-growth MedTech comparables trading at approximately 4x 2026 EV/S.

The firm believes Avita’s enhanced product mix, gross margins exceeding 80%, operating leverage, and expectations for positive free cash flow and GAAP net income next year support a richer enterprise value-to-sales multiple, setting its $8 price target at 2.8x 2026 EV/S.

In other recent news, Avita Medical Ltd reported its Q2 2025 earnings, which highlighted a net loss of $0.38 per share. This result exceeded analysts’ expectations, who had projected a loss of $0.25 per share. Despite a 21% year-over-year increase in commercial revenue to $18.4 million, Avita Medical did not meet its revenue forecast of $22.51 million. The earnings announcement has drawn significant attention due to the company’s performance relative to expectations. Analysts had anticipated better financial results, and the revenue shortfall has been a focal point for investors. The company’s financial report is a key development for stakeholders assessing Avita Medical’s recent performance. These updates are part of recent developments concerning Avita Medical.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.