What AVITA Medical Holders Bought Into Before A 281% Run

If AVITA Medical sat on your watchlist instead of in your portfolio, the outcome may feel like a missed shot. Investors who held AVITA Medical from the start of the year are up 280.7%, including dividends. That move arrived after a period that opened with bitter disagreement, from a bullish case built on Medicare reimbursement clarity and trauma expansion to a cautious view focused on RECELL dependence and cost controls. Which of those early assumptions about reimbursement stability most deserved your attention?

The easy part of this move is behind AVITA Medical. Zero in on 29 high quality undervalued stocks for companies trading below our estimates.

The Two AVITA Medical Stories Investors Were Arguing About

The shares cost US$3.45 at the start of the period, and AVITA Medical sat between two sharply different stories that both sounded plausible.

On the upbeat side, the optimistic view saw Medicare and Medicaid issues settling down and trauma expansion gathering pace. This supported a Fair Value of US$8.26, a notional price based on assumptions about future earnings and cash flows.

The sceptical camp focused on reimbursement pressure and RECELL dependence, and worked off a Fair Value of US$3 that leaned on slower 21.2% revenue growth and profit margin assumptions of 16.3%.

What The Results Changed For AVITA Medical

Quarterly figures gave AVITA Medical bulls fresh support on growth, with revenue at US$21.702 million in Q2 2026 compared with US$18.418 million a year earlier. Losses narrowed as net income moved from a US$9.92 million loss to a US$7.663 million loss and net margin improved from -53.9% to -35.3%. Profitability targets remained unproven, so the evidence cut both ways.

The hinge assumption here was reimbursement clarity turning into higher sales and better margins. For any other healthcare stock built on a similar story, it may be useful to track reported revenue and net margin after each coding or pricing change to see whether that promise is showing up in the numbers.

What AVITA Medical’s Run Now Asks You To Believe

AVITA Medical now trades at US$13.21, after a very large gain from the start of the year. The selected Narrative’s Fair Value sits below that level, framing today’s quote as already pricing in meaningful execution on reimbursement, product expansion and international plans.

A buyer at US$13.21 is effectively betting that RECELL, PermeaDerm and newer launches achieve broad, durable adoption. The Narrative asks how that assumption holds up once you factor in reimbursement pressure, regulatory delays and tougher competition for future wound care budgets.

"Persistent and intensifying healthcare cost controls and reimbursement headwinds, including the recent multi-quarter disruption caused by the transition to new CPT codes for RECELL and ongoing payer scrutiny, are likely to restrict provider adoption and suppress top-line revenue growth, especially as premium pricing becomes harder to sustain in an environment where hospitals and payers are focused on cost containment."

One Narrative has put a figure on that disagreement. → See the Narrative with its lower Fair Value, assumptions and all

Before The Next Story Makes Headlines

By the time a rally makes headlines, you are reading about returns someone else has already earned. Why not go straight to the source and look for your own contrarian opportunity? These three companies trade below our estimated value.

• Company 1 - 30% below our estimate - targets a sizeable resource base while managing operational complexity and jurisdictional uncertainty.
• Company 2 - 46% below our estimate - scales integrated gaming and payment platforms as users move from physical venues.
• Company 3 - 33% below our estimate - wins subsea engineering work as shorter-cycle tieback projects secure recurring activity.

Those are three of them. See the full list of 25 financially solid companies →

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.

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