OPKO Health, Inc.

OPK Details

OPKO Health, Inc. (NASDAQ: OPK) is a diversified biotechnology firm with pharmaceutical and diagnostic research and development operations. BioReference Laboratories, Inc. (BioReference), one of the nation's largest full-service laboratories with a core genetic testing business, including the 4Kscore Test, is part of its diagnostics division. Rayaldee, a US Food and Drug Administration (FDA) authorized medication for secondary hyperparathyroidism (SHPT) in people with stage 3 or 4 chronic kidney disease (CKD) and vitamin D deficiency, is part of the company's pharmaceutical business.

Latest News:

• FDA Approval: The US Food and Drug Administration (FDA) authorized OPK's 4Kscore Test, according to OPK, on December 08, 2021. This Test is approved for males aged 45 and up who have never had a prostate biopsy or biopsy but have an age-specific abnormal total prostate-specific antigen (PSA) and an abnormal digital rectal exam (DRE).

9MFY21 Results:

• Growth in Revenues: OPK's total revenues climbed 45.99% to USD 1.37 billion during 9MFY21 (ended September 30, 2021) from USD 940.74 million during 9MFY20, due to an improvement in clinical test reimbursement, an increase in clinical test volume and genomic test volumes.
• Growth in Bottomline: Its net income was USD 43.63 million during 9MFY21, compared to a loss of USD 1.71 million during 9MFY20.
• Decent Balance Sheet: The company ended the quarter with a cash position of USD 148.60 million and total debt (including exchange notes and lease liabilities) of USD 206.22 million.

Key Risks:

• Ownership Concentration Risk: Phillip Frost, OPK's CEO and Chairman, controlled around 41.3% of the outstanding common stocks as of January 31, 2021, giving him significant control over the company's operations and limiting the ability of other shareholders to influence business decisions.

Outlook:

• Somatrogon Approval: Somatrogon regulatory applications are progressing globally, with action dates in the United States, Europe, and Japan expected in the first half of FY22.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

OPK Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

OPK share price has surged 21.43% in the past week and is leaning towards the mid-band of the 52-week range of USD 3.26 to USD 6.27. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is at 67.92, indicating an overbought zone. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 4.06.

Considering the uptick in the stock price in a short span and current valuation, we believe the decent business fundamentals are adequately reflected at current trading levels. Hence, we recommend a "Sell" rating on the stock at the current price of USD 4.70, up 17.79%, as of December 17, 2021, 1:28 PM ET.

*All forecasted figures and Industry Information have been taken from REFINITIV.

*The reference data in this report has been partly sourced from REFINITIV.