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CryoLife Inc. Message Board

  • dlhild May 5, 2010 12:32 PM Flag

    how low does CRY go...

    Let's assume that CRY loses all HemoStase sales after June 30th. That would mean that on a annualized pre-tax basis CRY would generate cash flow of about $14M top side...assuming BioGlue sales don't fall off a cliff. Now apply a tax rate, say 40%, would result in post-tax cash flow of about $8.5m. Divide this by 28m shares and you get EPS of about $0.30. Now apply a 15x P/E, and perhaps this POS is only worth about $4.50/share. Apply a P/E of 10x, and you get $3.00/share. Whack BioGlue sales and you could be in the $2's. So, the question low does CRY go?

    Get ready for a 1:1 tender offer, or the rough equivalent, folks.

    What CRY needs to do is to remove SGA, and replace him with GS. Then remove DAL and replace him with GT. Then this turd would grow into a lily.

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    • CRY is going down because of the general market downturn. It is a small cap stock and it moves down and up more than average.

      The Medafore situation may be a factor because it is an uncertainty which is always a problem. The fact that CRY lost/gave up their Medafor takeover doesn't make management look good and you can question their judgement and effectiveness.

    • Don't forget to add in a$1 for cash on the bs. So at 15 time you get $5.50. I think 15x is cheap for a cf positive med dev company. I think its cheap here and am a buyer.

    • dl,

      I understand you are holding medafore but just Bashing CRY will not help what you want. I like your informative posts on CRY. ""What I do not like is your idiosyncratic views on CRY.""

      There are many possibilities, SGA is not young, I agree he is stubborn, It can be eaily a buy out candidate and on radar by many major companies.

      Let's be clear here, CRY has a moat, they have niche in what they are doing, they do have a pipeline products, as mentioned by SGA in CC and as mentioned they can eplore things on biodisk.

      Giving 10-15 PE is ridiculous.

      Your scarring tactics is not going to help you but it may harm you.

      • 2 Replies to pahad21
      • dlhild May 5, 2010 2:20 PM Flag

        IMO, not necessarily ridiculous for several reasons:
        1. The S&P 500 trailing P/E is around 20x. Historically, the average is 16x. Market cycle lows generally occur below 10x, although a person only sees about 3 market lows during their adult life. The point is this market is still general over valued, and when it hits bottom...I'm guessing in another 2 to 8 years...CRY will come down too. This correction is inevitable, it is just the way long term secular trends work.
        2. CRY has not demonstrated any ability to consistently increase their EPS. Quite hit and miss. Hence a lower P/E is perhaps warranted.
        3. Future cash flow from BioGlue is uncertain. Patents expire 2012/2013. The product may be dated too. Also, probably more competition coming into the BioGlue space. BioGlue cash flow could fall off a cliff, and remember that BioGlue is CRY's cash cow.
        4. HemoStase sale outlook is uncertain, again warranting a lower P/E.
        5. Tissue, which is over half their sales, is a low margin, highly regulated, high fixed cost business that generates very little cash flow. This acts to pull down CRY's P/E.

        If CRY could bring certainty to more aspects of their business, sell more high margin product (e.g. BioFoam, HemoStase, other), and get out of the litigation business then perhaps a higher P/E's would be warranted.

      • Sorry about my Typos, I am not a good typer.

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