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Here's Why You Should Hold on to OPKO Health (OPK) Stock Now

OPKO Health, Inc. OPK is well-poised for growth in the coming quarters, courtesy of its potential in RAYALDEE. A robust second-quarter 2022 performance, along with a few strategic agreements, is expected to contribute further. Stiff competition and concerns regarding overdependence on RAYALDEE persist.

Over the past year, this Zacks Rank #3 (Hold) stock has lost 49.5% compared with 36.1% decline of the industry and 18.1% fall of the S&P 500.

The renowned multinational biopharmaceutical and diagnostics company has a market capitalization of $1.45 billion. It projects 38.1% growth for 2023 and expects to maintain its strong performance. OPKO Health’s earnings surpassed the Zacks Consensus Estimate in one of the trailing four quarters, missed the same in two and broke even in the other, with the average earnings surprise being 33.3%.


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Let’s delve deeper.

Potential in RAYALDEE: We are upbeat about OPKO Health’s RAYALDEE business. Within the Pharmaceuticals arm, revenues from products rose 0.6% in the second quarter of 2022, owing to higher RAYALDEE sales. Revenues from sales of RAYALDEE in the second quarter of 2022 were up 24% from the prior-year period.

In February, OPKO Health announced that Vifor Fresenius Medical Care Renal Pharma had initiated the commercial launch of RAYALDEE (extended-release calcifediol) in Germany, the first launch of RAYALDEE outside the United States.

Strategic Agreements: OPKO Health has entered into a slew of agreements over the past few months, raising our optimism. During the second quarter of 2022, management confirmed that BioReference Laboratories’ Scarlet Health announced a collaboration with Teladoc Health.

In May, it announced the acquisition of privately held biotechnology company, ModeX Therapeutics, Inc.

Strong Q2 Results: OPKO Health’s solid second-quarter 2022 results buoy our optimism. The uptick in year-over-year Pharmaceuticals revenues is encouraging. During the quarter, Pfizer Inc. launched OPKO Health’s NGENLA (Somatrogon) injection in Germany, Japan and additional global markets. The expansion of gross margin also bodes well. OPKO Health’s strength in its women's health and oncology businesses augurs well. Robust adoption of the company’s digital health services buoys optimism.

Downsides

Stiff Competition: The pharmaceutical, diagnostic and laboratory testing industries are highly competitive and require an ongoing and extensive search for technological innovation. Numerous companies, including major pharmaceutical companies, specialty pharmaceutical companies and specialized biotechnology companies, are engaged in developing, manufacturing and marketing pharmaceutical products competitive with those OPKO Health intends to commercialize itself and through its partners.

Overdependence on RAYALDEE: OPKO Health’s RAYALDEE is the company’s only pharmaceutical product approved for marketing in the United States. The company’s ability to generate revenues from product sales and achieve profitability is substantially dependent on its ability to effectively commercialize RAYALDEE. The failure to successfully commercialize RAYALDEE would have a material adverse effect on the company’s business, financial condition, cash flows and results of operations.

Estimate Trend

OPKO Health is witnessing a negative estimate revision trend for 2022. In the past 90 days, the Zacks Consensus Estimate has widened from a loss of 21 cents per share to a loss of 42 cents.

The Zacks Consensus Estimate for the company’s third-quarter 2022 revenues is pegged at $177.4 million, suggesting a 54% fall from the year-ago quarter’s reported number.

Key Picks

Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. AMN, ShockWave Medical, Inc. SWAV and McKesson Corporation MCK.

AMN Healthcare, flaunting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 3.2%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 15.7%.

You can see the complete list of today’s Zacks #1 Rank stocks here.

AMN Healthcare has lost 8.7% compared with the industry’s 40.6% fall in the past year.

ShockWave Medical, sporting a Zacks Rank #1 at present, has an estimated growth rate of 33.1% for 2023. SWAV’s earnings surpassed estimates in all the trailing four quarters, the average beat being 180.1%.

ShockWave Medical has gained 13.3% against the industry’s 36.1% fall over the past year.

McKesson, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 10.1%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average beat being 13%.

McKesson has gained 67.9% against the industry’s 18.9% fall over the past year.


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McKesson Corporation (MCK): Free Stock Analysis Report
 
AMN Healthcare Services Inc (AMN): Free Stock Analysis Report
 
OPKO Health, Inc. (OPK): Free Stock Analysis Report
 
ShockWave Medical, Inc. (SWAV): Free Stock Analysis Report
 
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