CryoPort's Refrigeration Unit Is A Distraction From Core Business: Analyst Expects Divestiture

KeyBanc Capital Markets analyst Paul Knight downgraded CryoPort, Inc CYRX to Sector Weight from Overweight.

The analyst notes that CYRX preannounced another clunky quarter, with the cryogenic freezer business, MVE, the primary culprit. 

The refrigeration business is a distraction from its core business, Knight notes.

The analyst suggests that CryoPort should either sell the MVE business and focus on the core, base MVE guidance on a fraction of what is internally projected, or demonstrate why MVE is a critical asset.

MVE, acquired by CYRX in Aug. 2020 for $320 million in cash, sells OEM components to end-market sellers. With MVE driving a second miss over the last four quarters, it appears to have low revenue predictability, the analyst flags.

Overall, Knight estimates that Cryoport will grow revenue (1.8%), 10.1%, and 13.8% in the years FY23, FY24, and FY25, respectively. 

Additionally, adjusted EBITDA margins will be down to 3.5% in FY24 compared to 4.6% in FY22 and 8.0% in FY21.

However, a vital driver of the company's growth estimates will be the success and ramp of commercial stage therapies, which can generate $2 million-$28 million annually for Cryoport. This compares to the current estimate of $1.2 million per therapy in FY24. 

Price Action: CYRX shares are trading higher by 3.09% to $15.50 on the last check Monday.