Value
4.1/10data confidence 33%| Component | Sub-score |
|---|---|
| P/S | 5.7 |
| Analyst target | 3.0 |
RCEL · Why this verdict
Why Avita Medical (RCEL) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score4.8/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Avita Medical is growing revenue but still burns cash, scores below the quality floor, and trades above its analyst target, leaving little room for upside while earnings execution stays inconsistent.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Business quality sits below the 4.0 floor at 2.9 because free cash flow burns at 18% of revenue and the Rule of 40 test fails. Quality breakdown | Free cash burn should narrow and the quality score should climb toward the 4.0 floor over 12 months. | →Stable |
| CounterGross margin scores 10 out of 10 and the moat scores 7, so scale could convert the margin into operating profit faster than the burn rate implies. | ||
The stock at $13.04 is above the $11.40 analyst target, so upside is -12.6% and the target has been reached. Estimated upside | Without target revisions, shares should offer little further upside and risk mean-reverting toward the target. | →Stable |
| CounterCoverage is light with only a few analysts, so targets may lag the recent revenue acceleration and be raised. | ||
Quarterly revenue rose to $21.7M in the June 2026 quarter from $18.4M a year earlier, about 18% growth after a flat 2025. Revenue quarters | Quarterly revenue should keep rising toward the $31.8M next-quarter estimate over the next 12 months. | ↓Deteriorating |
| CounterThe $31.8M next-quarter estimate implies a jump far above the $21.7M run-rate, and revenue was flat to down through most of 2025. | ||
Avita missed EPS estimates in 7 of the last 12 quarters, with an average surprise of -18.2% over the last four. Last 4 quarters | Beats should outnumber misses over the next four quarters as the loss per share narrows. | ↓Deteriorating |
| CounterThe most recent quarter beat by 7.9% and the loss per share has narrowed from -0.71 to -0.36 over the last year. | ||
Momentum scores 4.1, below the engine's 4.5 bar, with falling on-balance volume despite price holding above the 200-day average. Engine gate (failed) | Momentum should recover above the 4.5 bar as volume confirms the price trend. | →Stable |
| CounterThe stock is above its 200-day average and near the top of its 52-week range, which suggests the weak volume reading may be noise. | ||
Business quality sits below the 4.0 floor at 2.9 because free cash flow burns at 18% of revenue and the Rule of 40 test fails.
→StableQuality breakdown
- Expectation
- Free cash burn should narrow and the quality score should climb toward the 4.0 floor over 12 months.
CounterGross margin scores 10 out of 10 and the moat scores 7, so scale could convert the margin into operating profit faster than the burn rate implies.
The stock at $13.04 is above the $11.40 analyst target, so upside is -12.6% and the target has been reached.
→StableEstimated upside
- Expectation
- Without target revisions, shares should offer little further upside and risk mean-reverting toward the target.
CounterCoverage is light with only a few analysts, so targets may lag the recent revenue acceleration and be raised.
Quarterly revenue rose to $21.7M in the June 2026 quarter from $18.4M a year earlier, about 18% growth after a flat 2025.
↓DeterioratingRevenue quarters
- Expectation
- Quarterly revenue should keep rising toward the $31.8M next-quarter estimate over the next 12 months.
CounterThe $31.8M next-quarter estimate implies a jump far above the $21.7M run-rate, and revenue was flat to down through most of 2025.
Avita missed EPS estimates in 7 of the last 12 quarters, with an average surprise of -18.2% over the last four.
↓DeterioratingLast 4 quarters
- Expectation
- Beats should outnumber misses over the next four quarters as the loss per share narrows.
CounterThe most recent quarter beat by 7.9% and the loss per share has narrowed from -0.71 to -0.36 over the last year.
Momentum scores 4.1, below the engine's 4.5 bar, with falling on-balance volume despite price holding above the 200-day average.
→StableEngine gate (failed)
- Expectation
- Momentum should recover above the 4.5 bar as volume confirms the price trend.
CounterThe stock is above its 200-day average and near the top of its 52-week range, which suggests the weak volume reading may be noise.
Per-dimension breakdown
Quality
2.9/10data confidence 100%| Component | Sub-score |
|---|---|
| ROA | 0.0 |
| Gross margin | 10.0 |
| Op margin | 0.0 |
| Net margin | 0.0 |
| Current ratio | 1.7 |
| FCF quality | 0.0 |
| Moat | 7.0 |
| Rule of 40 | 3.0 |
| Piotroski F | 4.4 |
- ▸Cash-burning: FCF -18% of revenue
- ▸Rule of 40: 0 (fail)
- ▸Quality concerns
Growth
7.0/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 7.0 |
Momentum
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.0 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 4.0 |
- ▸Overbought (RSI 80)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
4.2/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 2.6 |
| erm sentiment | 5.0 |
- ▸Below analyst target
Insider
6.7/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 5.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
3.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.5 |
| quality rank | 0.8 |
| growth rank | 6.9 |
Technical
4.0/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 0.4 |
| 52w position | 9.8 |
| gap | 6.0 |
Risk (lower is worse)
3.4/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.4 |
| days to cover | 1.8 |
| volatility | 0.0 |
| put call | 10.0 |
| implied vol | 0.0 |
| max pain risk | 3.0 |
| beta | 3.4 |
- ▸High IV: 103%
- ▸Above max pain $10
- ▸Concentration risks: 2 HIGH, 2 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
3.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
- ▸Earnings concerns: 2B/2M
- ▸Earnings in 7 days
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (6)
- MOMENTUM:7.4>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:-2.0=NEGATIVE
- EARNINGS_PROXIMITY:7d<=7d
Warning (0)
none
Reward-to-Risk
-2.00
Upside
-30.0%
Downside
15.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — Beta 1.99>1.3, MCap $0.5B<$5B
Investment implication
The SELL_IF_HOLDING verdict reflects the ASYMMETRY gate's -2.0=NEGATIVE outcome against Momentum at 7.4 and asymmetric R:R of -2.00.
The strongest dimensions are Momentum at 7.4, Growth at 7.0, and Insider at 6.7; the weakest are Quality at 2.9, Catalyst at 3.3, and Risk (lower is worse) at 3.4. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of -2.00 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Cash Burn Below Quality Floor
Trip ifFree cash flow margin rises above -5% of revenue from the current -18%.
- P2Price Above Analyst Target
Trip ifAnalyst target rises above $15 from the current $11.40.
- P3Revenue Reacceleration Recent Quarters
Trip ifQuarterly revenue falls below $18M from the latest $21.7M.
- P4Inconsistent Earnings Delivery
Trip ifEPS beats occur in at least 3 of the next 4 reported quarters.
- P5Momentum Below Engine Bar
Trip ifMomentum score rises above 5.5 from the current 4.1.