On Friday, B.Riley adjusted its stance on CryoPort shares (NASDAQ:CYRX), downgrading the stock from Buy to Neutral and lowering the price target to $19 from the previous $22. The shift in rating follows CryoPort's fourth-quarter financial performance, which fell short of both the firm's and consensus estimates. The logistics solutions provider reported a quarterly revenue of $57.3 million, an adjusted EPS of $(1.30), and an adjusted EBITDA of $(6.6 million), missing the anticipated figures.
CryoPort's quarterly revenue saw a 5% sequential increase, mainly attributed to its Biopharma division, which grew by 6%, and its Reproductive Medicine Business, which saw an 11% increase. However, these gains were partly offset by a slight decrease in the Animal Health business due to seasonal effects. The company's bottom line suffered from a reduced gross margin, as the high-margin MVE segment contributed less to total revenue.
For the fiscal year 2024, management has provided revenue guidance in the range of $242 million to $252 million, indicating a 6% growth at the midpoint. Despite positive industry developments, such as Gilead Sciences' (NASDAQ:GILD) plans to quadruple CAR T manufacturing capacity by 2026, CryoPort experienced four consecutive quarters of flat sales from the cell and gene therapies (CGTs) it monitors.
The company's support for clinical trials continues to expand, reaching a new high of 675 trials, up from 654 at the end of the previous year. However, the firm believes that the revenue growth from these trials and commercial CGTs will not significantly impact top-line growth in the near term. Competition in the market is also a concern, highlighted by the sales of Johnson & Johnson's (NYSE:JNJ (NYSE:JNJ)) Tecvayli, which may indicate potential market share challenges.
Year-to-date, CryoPort's stock has risen by 7%, recovering from a 52-week low of $9.13. This performance is compared to the Health Care Select Sector SPDR Fund (NYSEARCA:XLV), which is up by 1% over the same period. Given the modest top-line growth, ongoing unprofitable operations, and limited profit visibility in a high-interest investment environment, B.Riley has opted to take a more cautious approach, waiting for improvements from MVE and increased investment in CGT clinical trials before reassessing their position.
InvestingPro Insights
Following B.Riley's recent downgrade of CryoPort, a closer look at the company's financial health through InvestingPro data reveals a complex picture. CryoPort's market capitalization stands at approximately $843.66 million, reflecting its position in the market. Despite a slight revenue growth, the company's revenue has decreased by 1.7% over the last twelve months as of Q4 2023, with a more pronounced quarterly drop of 5.13% in Q4 2023. This underscores the challenges faced in scaling up operations and the impact of competitive pressures. The company's gross profit margin remains robust at 42.59%, yet it operates at a negative operating income margin of -25.14%, indicating that expenses are outpacing gross profits.
InvestingPro Tips suggest that CryoPort's stock price movements have been quite volatile, which is consistent with the large price uptick of 69.9% over the last six months. This volatility can be a double-edged sword for investors seeking stability or those looking for short-term gains. Analysts are cautious, as they do not anticipate the company will be profitable this year and have revised their earnings downwards for the upcoming period. However, the company's liquid assets exceed its short-term obligations, which may provide some cushion against financial stress in the near term.
For investors and analysts looking for a more comprehensive analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/CYRX. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and uncover even more insights that could inform your investment decisions. There are 5 more InvestingPro Tips available that could provide further clarity on CryoPort's financial trajectory and market position.
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