Research notes

We expect AVH will have significant share price moving newsflow when they update the market in February. In particular we are focused on updated quarterly revenue guidance, full year revenue guidance (we forecast growth of ~40%), a regulatory update on RECELL GO and most importantly a pointer to which quarter in CY25 the company plans to achieve positive cash flow. AVH is one of our key healthcare picks in 2024. We have made no changes to forecasts, valuation or target price and transfer coverage to Emily Porter. We maintain our Add recommendation.

MVF has announced it is growing its presence in Western Australia through the acquisition of Fertility North for an up-front cash payment of $12.0m. Recent industry cycle volumes as reported by Medicare show industry cycles for November were up 16% on the previous month and up ~4% on a four-month average on last year. We expect MVF will continue to gain market share benefitting from contributions of its acquisitions (PIVET medical and ART Associates). We have upgraded our FY24 forecasts to incorporate recent 1H24 guidance and have upgraded FY25/26 to include the benefit of the acquisition. Our target price has increased to $1.50 (from $1.29) and we maintain our Add recommendation.

As planned, EBO has increased its shareholding in Transmedic to 90% (from 51%). The additional shareholding will be funded through existing debt facilities and is priced in line with the original acquisition of LifeHealthcare. A recent trading update noted underlying EBITDA growth of 8.8% for the first four months of FY24. We are siting slightly ahead of this growth rate and are comfortable with our forecasts. We have made no changes to our valuation and have ~19% upside to our target price. We have an Add recommendation and see EBO as a quality growth company.

Avada Group (AVD) is a founder led, ASX-listed traffic management services company with an extensive network of operations in Australia and New Zealand. A market leader, operating in a highly fragmented industry, AVD has a long-runway of potential accretive M&A opportunities ahead. Through 1Q24, AVD delivered group revenue growth of 30% (vs pcp), which comprised strong inorganic (+17%) and organic (+13%) contributions. In FY23, AVD delivered A$183.3m revenue, A$38.4m gross profit, A$16.1m in underlying EBITDA and A$4.7m NPATA. Within the result, the group noted 7% of LFL revenue growth (ex-acquisitions) and gross margin improvement HoH (~22% in 2H; ~20% in 1H).