Stocks’ Details

Avita Medical Inc.

H1FY21 Performance Update: Avita Medical Inc. (ASX: AVH) is a medicine company with a technology platform to address therapeutic skin restoration. The market capitalisation of the company as on 25 March 2021, stood at ~$683.17 million. During H1FY21, the company reported an increase in revenue by ~56% to US$10.16 million, compared to US$6.50 million in the previous corresponding period. The net loss widened to US$15.86 million from US$14.06 million during the same period under consideration. The cash position of the company stood at US$59.76 million as of 31 December 2020.

H1FY21 Financial Performance (Source: Company Reports)

2QFY21 Highlights: The company reported U.S.-based RECELL revenue of ~US$5 million during the period, an increase of ~62% from the previous corresponding period. The total global revenue stood at US$5.1 million in 2QFY21. The count of procedural volumes was at 487 during the period. There was also an improvement in the gross margin of the company to 84% when compared to 74% in the previous corresponding quarter, aided by the extension of its shelf-life along with lower shipping costs and an increase in its production.

Outlook: The company believes that it is poised to drive business utilisation as the impact of the pandemic recedes and there is an inflow of patients to hospitals. It has made progress with the vitiligo pivotal trial and expects to file for FDA approval in 2022.

Stock Recommendation: As per a recent update, the company has appointed Michael Holder as its Chief Financial Officer, which was effective from 22 March 2021. As per ASX, the stock of AVH is trading above its average 52-weeks’ levels of $0.370-$9.580. The stock of AVH gave a positive return of ~4.902% in the past three months and a negative return of ~13.008% in the past one month. On a technical analysis front, the stock of AVH has a support level of ~$4.576 and a resistance level of ~$6.726. On a TTM basis, the stock of AVH is trading at an EV/Sales multiple of 20.6x, higher than the industry median (Healthcare) of 11.1x. Considering the current trading levels and valuation on TTM basis, widening of net losses and the key risks associated with the business, we are of the view that most of the positive factors have been discounted at current trading levels. Hence, we suggest investors to wait for a better entry-level and give an ‘Expensive’ rating on the stock at the current market price of $5.350, down by 2.728% as on March 25, 2021.

AnteoTech Ltd

Outcome of Clinical Study Results: AnteoTech Ltd (ASX: ADO) develops and commercialises products that have application in energy, diagnostic and medical device markets. The market capitalisation of the company as on 25 March 2021, stood at ~$468.44 million. As per a recent update, the company has reported the outcome of the COVID-19 Antigen Rapid Test (ART) clinical study results, which reported a sensitivity of 97.3% and specificity of 99.6%. The study enables ADO to be compliant with WHO guidelines for the market use of COVID-19 ART.

H1FY21 Results Update: The company reported an increase in sales revenue from ordinary activities by ~603% to ~$546,000, compared to the previous corresponding period. The total sales revenue along with other income stood at ~$1.85 million during the period. The net loss widened to $1.46 million, compared to a loss of $1.10 million in H1FY20. There was an improvement in the cash position of the company to $6.43 million as of 31 December 2020.

H1FY21 Financial Performance (Source: Company Reports)

Outlook: The company is developing the COVID-19 Saliva and COVID-19 Flu A/B and expects to commercialise it in late 2021. It is also in the early-stage development of sepsis detection tests and plans to enter the clinical trials in late 2021.

Stock Recommendation: ADO’s customer Ellume has secured a contract with the U.S. Department of Defence (DOD) for the Emergency Use Authorization (EUA) COVID-19 at-home test. As per ASX, the stock of ADO is trading above its average 52-weeks’ level of $0.013-$0.335. The stock of ADO gave a positive return of ~240.277% in the past six months and a positive return of ~11.36% in the past one week. On a technical analysis front, the stock of ADO has a support level of ~$0.2047 and a resistance level of ~$0.2544. Considering the current trading level, widening of losses and the absence of revenue visibility, we give an ‘Avoid’ rating on the stock at the current market price of $0.245, down by 2.001% as on March 25, 2021.

IDT Australia Limited

Feasibility Assessment to Manufacture COVID-19 Vaccine: IDT Australia Limited (ASX: IDT) is engaged in the supply of products, research, and development in the pharmaceutical space. The market capitalisation of the company as on 25 March 2021, stood at ~$108.10 million. As per a recent business update, the company is undertaking a feasibility assessment to check the possibility of using its sterile manufacturing facility to augment the production of a COVID-19 vaccine.

H1FY21 Performance Update: During the period, the company reported a revenue of $5.80 million. It reported an increase in EBITDA by ~212% to $1.92 million, compared to the previous corresponding period. However, H1FY21 includes an adjustment of $1.90 million pertaining to an accrual reversal. The NPAT stood at $1.12 million during the period. The cash position of the company was at $7.32 million as of 31 December 2020.

H1FY21 Financial Performance (Source: Company Reports)

Outlook: During the half year to 31 December 2020, IDT made progress to advance its Medicinal Cannabis Manufacturing Plan. Its extraction and purification activities have the capability to produce a range of cGMP medicinal resins and refined APIs.

Stock Recommendation: AS per the company, its sterile manufacturing facility is set to produce sterile vial products and can be deployed as a primary or secondary site for the manufacture of COVID-19 vaccine. As per ASX, the stock of IDT is trading above its average 52-weeks’ level of $0.086-$0.510. The stock of IDT gave a positive return of ~144.11% in the past six months and a positive return of ~124.32% in the past one week. On a technical analysis front, the stock of IDT has a support level of ~$0.36 and a resistance level of ~$0.45. On a TTM basis, the stock of IDT is trading at a P/BV multiple of 4.6x, higher than the industry median (Healthcare) of 4.0x, and thus seems overvalued. Considering the current trading levels and valuation on TTM basis, steep price movements in the past few months, and the key risks associated with the business, we are of the view that most of the positive factors have been discounted at the current juncture. Hence, we suggest investors to wait for a better entry-level and give an ‘Expensive’ rating on the stock at the current market price of $0.415, down by 7.778% as on March 25, 2021.

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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