AVITA Medical, Inc. (NASDAQ:RCEL) Consensus Forecasts Have Become A Little Darker Since Its Latest Report

Shareholders of AVITA Medical, Inc. (NASDAQ:RCEL) will be pleased this week, given that the stock price is up 16% to US$9.57 following its latest quarterly results. Revenue of US$15m came in 5.2% ahead of expectations, although statutory earnings didn't fare nearly so well, recording a loss of US$0.61, a 17% miss. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for AVITA Medical

Taking into account the latest results, the current consensus from AVITA Medical's ten analysts is for revenues of US$68.9m in 2024. This would reflect a huge 27% increase on its revenue over the past 12 months. Per-share losses are predicted to creep up to US$2.11. Before this latest report, the consensus had been expecting revenues of US$75.1m and US$1.73 per share in losses. So it's pretty clear the analysts have mixed opinions on AVITA Medical after this update; revenues were downgraded and per-share losses expected to increase.

The consensus price target fell 32% to US$20.45, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values AVITA Medical at US$40.03 per share, while the most bearish prices it at US$9.01. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that AVITA Medical's rate of growth is expected to accelerate meaningfully, with the forecast 62% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 32% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 23% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect AVITA Medical to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of AVITA Medical's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on AVITA Medical. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for AVITA Medical going out to 2026, and you can see them free on our platform here..

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for AVITA Medical that you should be aware of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.