Avita Medical: Revenue Downgrade but Long Term Intact

No-moat Avita Medical downgraded its first-quarter 2024 commercial revenue guidance by 27% to USD 11 million. It now expects to hit the bottom of its unchanged full-year guidance of USD 78.5 million to USD 84.5 million. The guidance implies that first-quarter 2024 commercial revenue will decline 21% on fourth quarter 2023. We have decreased our 2024 revenue forecast by 4% to USD 79 million, expecting an acceleration of commercial revenue growth to 57% from 46% in 2023. Our forecast five-year revenue compound annual growth rate of 27% is broadly unchanged. We maintain our AUD 5.40 fair value estimate with time value of money and a stronger US dollar offsetting our near-term earnings downgrades.