Morningstar calls Avita undervalued as shares slide further
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The news: Avita Medical shares have tumbled for a second straight session after the medical technology company downgraded its revenue guidance, but Morningstar analysts say the share remains undervalued.
The numbers: Morningstar retained its $5.40 fair value estimate on Avita shares, despite trimming its FY24 revenue estimate. Avita shares, which fell nearly 19% on Wednesday, were down a further 12% to $3.10 in early trading on Thursday.
The context: The share slide followed a revenue downgrade by the Nasdaq and ASX-listed company following slower-than-expected year-end purchasing by hospitals.
Morningstar analysts said the near-term bump is not likely to affect the long term opportunity for Avita’s skin repair products.
What they said: “We expect Avita’s expansion plan in Europe and Australia to help provide a path to positive cash flow by late 2025, in line with management’s slightly revised expectation,” the analysts said in a note.
The source: Morningstar research
