Medical device stock CryoLife (CRY) has pre-announced below-consensus 1Q20 revenue of $65.5M, slightly below prior guidance of $67–69M. As well as providing preserved human tissues and state-of-the-art cardiovascular surgery training, CRY also develops mechanical heart valves, surgical adhesives and cardiac lasers.
Management also withdrew its 2020 financial guidance citing Covid-19 uncertainty and preemptively drew down its $30M revolver. Additionally CRY revealed that it ended 1Q20 with $60M in cash.
CRY is managing its operating expenses, including implementing a hiring freeze, limiting most discretionary spending and capital spending, and deferring longer-term R&D and clinical research programs.
“While CRY’s revenue growth is likely to suffer from the COVID-19 pandemic, we think its mix of more urgent procedures and strong product cycle may allow it to fare better than companies with mostly elective procedure exposure” wrote Needham analyst Mike Matson following the announcement. He estimates the company has about $245M of debt.
“We have lowered our price target to $29 from $38 due to peer multiple compression and maintained our Buy rating” the analyst continued. With shares trading down close to 40% year-to-date, his new price target still suggests upside potential of over 75% from current levels.
Indeed, the stock boasts a confident Strong Buy consensus from the Street. TipRanks shows that the average analyst price target stands at $26.50. (See CRY stock analysis on TipRanks) “CRY will be “like a coiled spring once things normalize” added Oppenheimer’s Suraj Kalia on April 1.