Piper Sandler launched coverage of Avita Medical (NASDAQ:RCEL) with an “overweight” rating and $27 price target. The stock closed at $21.49 on March 1.
Avita makes Recell, which uses a patient’s own skin to make a cell-based spray-on solution that can be used to treat burns.
“The company is classified as regenerative medicine, though the technology, in our opinion, has broad application beyond its initial indication in treating burn patients,” writes analyst Matt O’Brien.
Beyond burns, the technology could have application in vitiligo, trauma, and pediatric scalding, among potentially others, which he said could add about $1.2-billion to the current burn total addressable market of $260-million.
Mr. O’Brien said Avita is working to take its Recell product into Japan and has signed a partner, COSMOTEC, to sell the product after approval, which is expected later this year.
“We anticipate Avita will have strong top-line growth in the coming years, with several clinical catalysts lining up for the remainder of 2021 and in 2022 as well,” he said. “Overall, we believe this could be a much bigger company in the coming years and encourage exposure to the name,” he added.
