RCEL Should I Buy
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AVITA Medical Inc (RCEL) is not a strong buy for a beginner, long-term investor at this time. The stock exhibits weak technical indicators, neutral to cautious analyst ratings, and mixed financial performance. While there are some positive catalysts, such as increased hedge fund buying and improved financial flexibility, the overall sentiment and growth trajectory do not currently justify a buy recommendation for a long-term investment.
The technical indicators for RCEL are bearish. The MACD is negatively expanding, RSI is neutral at 27.552, and moving averages indicate a downward trend (SMA_200 > SMA_20 > SMA_5). The stock is trading near its support level of 3.752, with resistance levels at 4.092 and 4.432. Overall, the technical outlook suggests weakness.
Hedge funds are significantly increasing their positions, with a 534.61% increase in buying activity over the last quarter.
The company has reduced its cash requirements under a new credit facility, enhancing financial flexibility.
Revenue growth for 2026 is projected between 12% and 19%.
The stock has declined approximately 71% year-to-date, reflecting poor market sentiment.
Q4 financials show a YoY revenue decline of 4.3%, a gross margin drop of 7.72%, and a YoY EPS decrease of 13.64%.
Analyst ratings remain cautious, with no strong buy recommendations and a focus on business stabilization.
The company has met EPS and revenue estimates only 50% of the time over the past year, indicating inconsistency.
In Q4 2025, revenue dropped by 4.3% YoY to $17.6 million, while net income improved slightly by 0.28% YoY to -$11.62 million. EPS declined by 13.64% YoY to -$0.38, and gross margin fell to 81.24%, down 7.72% YoY. The company projects 12%-19% revenue growth for 2026, but recent financials indicate challenges in achieving consistent growth.
Analysts are neutral to cautious on RCEL. Lake Street raised the price target to $3.50 but maintained a Hold rating, citing the need for business stabilization. BTIG upgraded the stock to Neutral from Sell, acknowledging improvement but refraining from recommending a buy. Overall, analysts are waiting for clearer signs of recovery before endorsing the stock.
