AVITA Medical (AVITA Medical) Predictability Rank

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What is AVITA Medical Predictability Rank?

Warren Buffett said many times that the companies he likes are:

1. Simple businesses that he understands
2. that have predictable and proven earnings and
3. with economic moat
4. those can be bought at a reasonable price.

It is hard to quantify "simple businesses that he (Buffett) understands", so we will focus on the other three characteristics instead. In GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank, we will show that the businesses that have predictable and proven earnings are usually also simple businesses that an average person could understand.

GuruFocus conducted a back test study of Warren Buffett's strategy of "buying good companies at fair prices" for the years from 1998-2008.

AVITA Medical Predictability Rank Calculation

In our database there are 2403 stocks that have been traded from Jan. 2, 1998 to Aug. 31, 2008. We have the complete 10-year financial data and trading prices of these companies for this period. We rank the predictability of these companies based on the consistency of their revenue per share and EBITDA (earning before interest, tax, depreciation and amortization) per share over the past ten fiscal years, and study the correlation between the stock performances and the predictability of the business.

Our study may be subject to these biases and assumptions:

Dividend yields are not counted for investment returns
Effects of price changes due to spin-offs may not be fully adjusted
Study is subjected to survivorship bias due to de-listing, bankruptcy, LBO, M&A, etc.

The correlation between business predictability and investment returns of a company is showed below.

Correlation Between Business Predictability and Investment Returns

	Predictables	Non-Predictable	All stocks
Total Number of stocks	570	1833	2403
Total Lost Money	61	830	891
Total Lost More Than 50%	18	412	430
Total Lost More Than 90%	4	86	90
Average Gain	260.6%	100.0%	138.1%
Median Gain	150.0%	13.0%	39.0%
Maximum Gain	2852.0%	11483.0%	11483.0%
Maximum Loss	-100.0%	-100.0%	-100.0%
Annualized Average Gain	12.7%	6.7%	8.4%
Annualized Median Gain	8.9%	1.1%	3.1%

For the 570 predictable companies, we have seen strong correlation between the predictability of businesses and the stock performances over the past 10 years, regardless of the valuation of business at 1998. Accordingly, we have ranked the business predictability from 5-star to 1-star, as shown in this table.

Predictability Rank	5-Star	4.5-Star	4-Star	3.5-Star	3-Star	2.5-Star	2-Star	1-Star (non-predictable)	Average among all
% Out of All 2403 Stocks	3.3%	2.9%	3.7%	3.3%	3.3%	3.7%	3.3%	76.3%	100%
% that are in Loss (10y)	3%	10%	8%	9%	11%	18%	16%	45%	37%
Average Gain (10y)	364.6%	330.9%	278.0%	235.1%	243.5%	227.8%	154.8%	100.0%	138.1%
Median Gain (10y)	238.5%	193.5%	171.0%	159.0%	132.5%	113.5%	87.0%	13.0%	39.0%
Maximum Gainer	2228.0%	2547.0%	2452.0%	2852.0%	2432.0%	1892.0%	1807.0%	11483.0%	11483.0%
Maximum Loser	-82.0%	-53.0%	-67.0%	-100.0%	-83.0%	-100.0%	-78.0%	-100.0%	-100.0%
Annualized Average Gain	15.4%	14.6%	13.2%	12.0%	12.2%	11.7%	9.1%	6.7%	8.4%
Annualized Median Gain	12.1%	10.6%	9.8%	9.3%	8.2%	7.3%	6.0%	1.1%	3.1%

For detailed information about each predictability rank, please go to GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank

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AVITA Medical (AVITA Medical) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Medical Devices & Instruments » AVITA Medical Inc (NAS:RCEL) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

AVHHL:USA 51KA:Germany 51KA:Germany 51KB:Germany AVH:Australia

Address

28159 Avenue Stanford, Suite 220, Valencia, Los Angeles, CA, USA, 91355

Website

https://www.avitamedical.com

Avita is a single product company. Its RECELL system is an innovative burn treatment device which creates Spray-on Skin from a small skin sample within 30 minutes, thus avoiding or reducing the need for skin grafts. It's approved for the treatment of adult patients in the U.S. with paediatric clinical trials and expanded indications in soft-tissue reconstruction and vitiligo underway. It is currently in roll-out across the approximately 136 U.S. burn centers. Despite having product approval in Australia, Europe, Canada, and China, Avita is not actively marketing in those territories and focussing instead on the U.S. region. However, it is expected to launch in Japan via distribution partner Cosmotec in second-half fiscal 2022. Avita is domiciled, and has its primary listing, in the U.S.

Executives

James Corbett	director	2 GOODYEAR, IRVINE CA 92618
Jeremy Curnock Cook	director	TARGETED GENETICS CORP, 1100 OLIVE WAY STE 100, SEATTLE WA 98101
David D O'toole	officer: CFO	1640 MARENGO STREET, LOS ANGELES CA 90033
Donna Shiroma	officer: General Counsel	C/O AVITA MEDICAL, 28159 AVENUE STANFORD, SUITE 220, VALENCIA CA 91355
Cary Guy Vance	director	800 EAST MIDDLEFIELD RD, MOUNTAIN VIEW CA 94043
Robert Mcnamara	director	C/O LDR HOLDING CORPORATION, 13785 RESEARCH BOULEVARD, SUITE 200, AUSTIN TX 78750
Michael S Perry	director, officer: Chief Executive Officer	C/O BIOTRANSPLANT INC, 196 BOSTON AVE SUITE 2800, MEDFORD MA 02155
Suzanne Crowe	director	C/O AVITA MEDICAL, 28159 AVENUE STANFORD, SUITE 220, VALENCIA CA 91355
Jan Stern Reed	director	C/O JAN STERN REED BAXTER INTERNATIONAL, ONE BAXTER PARKWAY DF2 2W, DEERFIELD IL 60015
Michael Holder	officer: Chief Financial Officer	6170 RESEARCH RD., STE 103, FRISCO TX 75034
Kathy M. Mcgee	officer: Chief Operating Officer	C/O AVITA MEDICAL, 28159 AVENUE STANFORD, SUITE 220, VALENCIA CA 91355
Sean Ekins	officer: Sr. VP of Finance	C/O AVITA MEDICAL, 28159 AVENUE STANFORD, SUITE 220, VALENCIA CA 91355
David Mcintyre	officer: Chief Financial Officer	SUITE 4 LEVEL 46 2 PARK STREET, SIDNEY C3 2000
Damien Mcdonald	director	5 MERCHANT SQUARE, NORTH WHARF ROAD, LONDON X0 W21AY
Erin Liberto	officer: Chief Commercial Officer	C/O AVITA MEDICAL, 28159 AVENUE STANFORD, SUITE 220, VALENCIA CA 91355