Avita Medical: Shares Remain Undervalued, With Long-Term Opportunity Intact

We maintain our AUD 5.40 per share fair value estimate for no-moat Avita Medical. First-quarter 2024 net loss was USD 18.7 million versus a USD 7.1 million loss in the fourth quarter of 2023. First-quarter 2024 commercial revenue of USD 11.1 million fell 22% on the fourth quarter of 2023. As previously flagged, this was largely due to hospital approvals taking longer than anticipated, slowing the uptake of RECELL for full-thickness skin defects. However, we do not foresee this affecting Avita’s long-term opportunity. Operating expenses rose 8% sequentially on the fourth quarter of 2023, largely due to increased sales and marketing costs. However, this was also largely as we expected, with the firm previously outlining its plan to expand its US sales team to 108 from 70 in the first quarter of 2024.