AVITA Medical: Lake Street maintains Buy, PT down to $8 from $14.

AVITA Medical: Lake Street maintains Buy, PT down to $8 from $14.

AVITA Medical (RCEL) has seen its stock price fluctuate significantly in recent months, with Lake Street Capital Markets maintaining a Buy rating but lowering its price target to $8 from $14. The stock, currently trading at $4.48, has experienced a year-to-date decline of over 66% according to InvestingPro data [2].

The investment firm noted that Medicare Administrative Contractor (MAC) adjudications began flowing in July, with broader contractor compliance expected in the second half of 2025. This development suggests that the reimbursement disruption affecting first-half performance may be on track for resolution [2].

Despite AVITA Medical cutting its full-year revenue guidance materially, the company has reiterated confidence in a second-half 2025 recovery. Lake Street views this as a prudent reset rather than a structural impairment. The firm believes that AVITA Medical's cohesive product portfolio, which includes RECELL, Cohealyx, and PermeaDerm, addressing different stages of wound care, supports a richer enterprise value-to-sales multiple [2].

Lake Street also highlighted that AVITA Medical's gross margins exceed 80%, and the company is expected to achieve positive free cash flow and GAAP net income in 2026. These factors contribute to the firm's confidence in AVITA Medical's ability to deliver value to investors [2].

The recent earnings report for Q2 2025 showed a net loss of $0.38 per share, exceeding analysts' expectations. 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 company's financial report is a key development for stakeholders assessing its recent performance [2].

In summary, while AVITA Medical faces ongoing challenges, Lake Street Capital Markets remains optimistic about the company's long-term prospects. The firm's Buy rating and lowered price target reflect a cautious yet optimistic view on AVITA Medical's future performance.

References:
[1] https://www.ainvest.com/news/avita-medical-2025-q2-earnings-narrowed-losses-revenues-guidance-cut-2508/
[2] https://www.investing.com/news/analyst-ratings/lake-street-capital-markets-assumes-coverage-on-avita-medical-stock-with-buy-rating-93CH-4183171