Broker tips 25% upside for this ASX healthcare stock following FY25 earnings results

ASX healthcare stock AVITA Medical Inc (ASX: AVH) recently released earnings results.

This prompted updated guidance from the team at Morgans. 

Let’s see what the company reported and how the broker reacted. 

AVITA Medical

AVITA Medical is a healthcare company specialising in regenerative medicine.

This ASX healthcare stock is down 60% over the last year. 

It released its full-year 2025 financial results last week. 

The company reported: 

• Total revenue of $71.6 million for full year 2025, compared to $64.3 million for full year 2024, representing an increase of approximately 11%, within the company’s revised revenue guidance for the year.
• A gross profit margin of 82.1%.
• A net loss of $48.6 million, or a loss of $1.74 per basic and diluted share, compared to a net loss of $61.8 million, or a loss of $2.39 per basic and diluted share, in the prior year.
• Full year 2026 revenue guidance of between $80 and $85 million, representing growth of approximately 12% to 19% compared to 2025 revenue.

Commenting on the result, Cary Vance, Interim Chief Executive Officer of AVITA Medical, said: 

The fourth quarter marked the close of a year of stabilisation, and the beginning of a more execution-focused phase, for the Company. 

While reimbursement disruption and operational transition weighed on revenue performance in 2025, those issues are now largely behind us, and we are seeing early signs of normalisation in clinician use of RECELL.

We enter 2026 with a clearer commercial focus and a validated portfolio that supports Page 2 growth through deeper utilisation within our core burn and trauma centres, with our priority centred on delivering consistent, execution-led growth quarter by quarter.

Morgans’ view following results

In a note out of the broker on Friday, Morgans said this healthcare stock’s FY25 results broadly met expectations. 

It said FY25 revenue landed slightly ahead of its forecast, while gross margin was a touch softer as secondary products entered the mix. 

Morgans also commented that operating expense was more disciplined, cash burn improved and the cash runway extended via the new debt facility with a small increase in available debt, but more importantly improved trailing revenue covenants. 

We see the below-consensus FY26 guidance range as a positive, to reset market expectations and give a sense the company is aiming to restore credibility around guidance, which has been off the mark in recent years. Gradual but achievable.

Speculative buy recommendation 

Based on this guidance, the team at Morgans retained its speculative buy recommendation and price target of $1.35. 

This ASX healthcare stock closed trading last week at $1.08. 

From this share price, the team at Morgans anticipates an increase of approximately 25%. 

The post Broker tips 25% upside for this ASX healthcare stock following FY25 earnings results appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Bell has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Avita Medical. The Motley Fool Australia has recommended Avita Medical. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.