OPKO Health, Inc.

OPK Details

OPKO Health, Inc. (NASDAQ: OPK) is a diversified biopharmaceutical and diagnostics company that generates revenue via laboratory testing for COVID-19 and 4Kscore test (a blood test that offers a customized risk score for prostate cancer) through its subsidiary BioReference Laboratories, Inc. (BRL), and from the sales of Rayaldee, a US Food and Drug Administration (FDA) authorized prostate cancer therapy. Its other sources of income include licensing, research and development (R&D), strategic partnerships, and commercialization agreements. OPK's primary product candidate is Somatrogon (hGH-CTP), a human growth hormone injection currently being developed with Pfizer, Inc.

Latest News:

• Collab with Taysha for GAN Testing: On October 13, 2021, GeneDx, Inc., a wholly-owned subsidiary of BRL, and its partner Taysha Gene Therapies, Inc., a company focused on AAV-based gene therapies, announced sponsored genetic testing for giant axonal neuropathy (GAN). Taysha will fund the inclusion of a genetic marker to test for GAN in the GeneDx hereditary neuropathy panel, which will be offered free of charge to those at risk for or suspected of having GAN.
• Krystal Decode DEB Program: On October 12, 2021, GeneDx announced a partnership with Krystal Biotech, Inc., a company focused on developing redosable gene treatments for rare disorders, to provide free genetic testing for all forms of Epidermolysis Bullosa (EB). The Krystal Decode DEB program will use highly reliable results from blood or cheek swab samples to provide patients suffering from a dystrophic version of this genetic condition (known as DEB) with a precise diagnosis.

Q3FY21 Results:

• Decline in Revenues: The company reported a 9.87% decrease in total revenues to USD 385.81 million in Q3FY21 (ended September 30, 2021) compared to USD 428.06 million in Q3FY20, primarily due to lower COVID-19 testing volumes.
• Increase in Bottomline: Q3FY21 net income amounted to USD 28.74 million, an improvement from USD 23.72 million reported in Q3FY20.
• Decent Balance Sheet: OPK exited the quarter with a cash balance of USD 148.60 million and total debt of USD 206.22 million.

Key Risks:

• Dependence on Commercialization of Somatrogon: OPK's business is heavily reliant on the receipt of marketing approval for Somatrogon in both minors and adult patients and the successful commercialization of the product.

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's stock price has increased 11.36% in the past three months and is leaning towards the lower band of the 52-week range of USD 3.02 to USD 6.27. The stock is currently trading between its 50 and 200 DMA levels, and its RSI Index is at 67.79. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 4.37.

Considering the slight uptick in the stock price, new collaborations, and current valuation, we recommend a "Hold" rating on the stock at the current price of USD 4.02, up 4.69% as of November 02, 2021, 2:15 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.

PetMed Express, Inc.

PETS Details

PetMed Express, Inc. D/B/A 1-800-PetMeds (NASDAQ: PETS) operates as a pet pharmacy in the US that markets prescription and non-prescription pet medications and other healthcare products for dogs and cats, direct to the consumer. PETS has about 3,000 Stock Keeping Units (SKUs) of pet medications, health products, and supplies in its product line. Through promotional activities, PETS also promotes its products to raise awareness of the '1-800-PetMeds' and 'PetMeds' brands. As of November 02, 2021, the company's market capitalization stood at USD 610.70 million.

Latest News:

• CEO Appointment: On August 31, 2021, PETS appointed Matt Hulett as its Chief Executive Officer (CEO), President, and a member of the Board. Mr Hulett is a seasoned technology leader who has built and led world-class digital consumer enterprises for more than 30 years and previously served as the President of Rosetta Stone.

Q2FY22 Results:

• Decline in Revenue: The company reported a YoY decrease of 10.67% in revenues to USD 67.39 million during Q2FY22 (ended September 30, 2021) from USD 75.44 million during Q2FY21, attributable to a YoY decrease of 8.48% in Reorder Sales.
• Decline in Net Income: The company's net income decreased to USD 6.35 million in Q2FY22 from USD 8.41 million in Q2FY21.
• Cash and Debt Position: As of September 30, 2021, the company had cash and cash equivalents of USD 106.56 million and no outstanding debt.
• Payment of Dividend: On October 25, 2021, the company declared a quarterly dividend of USD 0.30 per common share, payable on November 19, 2021, to shareholders of record on November 08, 2021.

Key Risks:

• Geographical Concentration Risk: In FY21, ~51% of the PETS' net sales were concentrated in California, Florida, Texas, New York, Pennsylvania, North Carolina, Georgia, and Virginia. Therefore, any suspension or revocation of the firm's pharmacy license in these locations, or if the company is no longer allowed to operate in these vital markets, could harm its financials.
• Regulatory Risk: PETS is subject to strong regulatory scrutiny, non-observance of which could lead to recall or even suspension of its pharmacy license.

Outlook:

• CAPEX Estimates: PETS expects to incur ~USD 1.0 million in capital expenditures in the remainder 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.

PETS Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

PETS' stock price increased 2.25% in the past six months and is currently leaning towards the lower end of its 52-week range of USD 24.75 to USD 57.00. The stock is currently trading between its 50 and 200 DMA levels, and its RSI Index is at 63.17. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 33.35.

Considering the slight correction in the stock price, strong profitability margins, current valuation, and associated risks, we recommend a "Hold" rating on the stock at the closing price of USD 29.57, up 1.41% as of November 02, 2021.

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

* All forecasted figures and industry information have been taken from REFINITIV.