If you are on the hunt for big returns, then it could pay to listen to Bell Potter.
That's because the broker is tipping an ASX stock to rise approximately 35% over the next 12 months.
And that's despite the stock rocketing 20% on Friday.
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Which ASX stock?
The stock that Bell Potter is urging investors with a high risk tolerance to buy is AVITA Medical Inc (ASX: AVH).
AVITA Medical is the medical device company behind Recell. It is a medical device used for the reconstruction of skin in patients with severe burns. Bell Potter believes that Recell could be the most important innovation in the treatment of severe burns in several decades.
The broker was pleased with the ASX stock's quarterly update, which revealed revenue ahead of expectations and a big improvement in its cash burn. It said:
AVH reported 2Q26 revenue of US$21.7m (+18% pcp; +13% QoQ), ahead of BPe $20.0m and marking a new quarterly record. RECELL US revenue was $18.5m, with US unit volumes increasing more than 10% sequentially to >2,600 units, while Cohealyx and PermeaDerm contributed $1.7m (+16% QoQ) and $0.6m (+40% QoQ), respectively.
The quarter also showed a material improvement in cash use, falling to $3.2m from $9.9m in Q1, with cash and marketable securities of $11.1m at quarter end. AVH remains compliant with its revenue covenants, with $50m of debt principal outstanding and a further $10m tranche available upon achieving the $85m TTM revenue threshold.
Big price target increase and recommendation upgrade
According to the note, in response to the update, Bell Potter has upgraded the ASX stock to a speculative buy rating with a vastly improved price target of $2.10 (from $1.20).
Based on its current share price of $1.54, this implies potential upside of approximately 35% for investors over the next 12 months.
Commenting on the upgrade, Bell Potter said:
We believe the investment case has improved materially following Q2. The MAC overhang appears increasingly behind the business, with improved reimbursement visibility and stronger RECELL growth supporting record quarterly revenue.
Lower cash burn improves confidence in the path to breakeven; we conservatively forecast FY27 versus management's CY26 target, while funding risk remains given limited liquidity. We upgrade to Speculative Buy and increase our valuation to A$2.10/share.
All in all, this could make AVITA Medical worth considering if you have a high tolerance for risk and want exposure to the healthcare sector for your portfolio.
