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Here's Why You Should Retain OPKO Health (OPK) Stock for Now

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OPKO Health, Inc. (OPK - Free Report) is well poised for growth on solid prospects in RAYALDEE and BioReference platforms, and strong focus on research and development (R&D). However, tough competition has been offsetting the positives to an extent.

The stock has gained 188.9% in the past six months, compared with the industry’s growth of 30.6%.

The company — with a market capitalization of $2.61 billion — engages in the diagnostics and pharmaceuticals business in the United States, Ireland, Chile, Spain, Israel and Mexico. It anticipates earnings improvement of 12% over the next five years. Moreover, the company has a trailing four-quarter earnings surprise of 43.6%, on average.

Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #3 (Hold).

Key Catalysts

RAYALDEE Gains Prominence: OPKO Health’s BioReference platform is the third largest full-service clinical laboratory. Per management, BioReference Laboratories has been making excellent progress with regard to its top and bottom-line performance. Notably, the platform is poised for growth in 2020.

Per management, total RAYALDEE prescriptions reported by IQVIA improved 45% year over year in the second quarter. Since launch, more than 20,500 patients have had RAYALDEE prescribed by nearly 3,200 physicians. With the acceptance of several Marketing Authorization Applications and a few that are under review in other European countries, Vifor Fresenius anticipates approvals in several European countries during 2020 to market RAYALDEE for the treatment of secondary hyperparathyroidism in adult non-dialysis patients with chronic kidney disease.

In June, the company announced that the FDA authorized OPKO to start a Phase 2 trial of RAYALDEE as a treatment for patients with mild-to-moderate COVID-19. This authorization comes after publication of numerous independent studies that reported a correlation between vitamin D status and COVID-19 risk and severity.

Solid R&D Focus: The company’s strong focus on R&D is a positive. Its solid commitment toward innovation led to the introduction of several products, improvements in existing products, expansion of product lines, and enhancements and new equipment in the R&D facilities. Per management, the company will continue to make solid investments in R&D programs throughout 2020.

However, there is a factor marring growth.

Cut-throat Competition in the Niche Space: The medical instrument industry is highly competitive. The industry calls for extensive research for technological innovation continuously. In fact, there are several companies that have been trying to outpace OPKO Health in terms of cost efficiency and diverse portfolio. Per management, major pharmaceutical bigwigs, specialty pharmaceutical companies and specialized biotechnology companies are direct competitors of OPKO Health’s pharmaceutical business.Competitors of the diagnostics business include major diagnostic companies, reference laboratories, molecular diagnostic firms, universities and research institutions.

Which Way Are Estimates Headed?

For 2020, the Zacks Consensus Estimate for revenues is pegged at $1.27 billion, indicating an improvement of 41.1% from the previous year. The same for earnings per share stands at 3 cents, suggesting a rise of 107.3% from the previous year.

Key Picks

A few better-ranked stocks from the broader medical space are NextGen Healthcare , Surmodics (SRDX - Free Report)  and Thermo Fisher Scientific (TMO - Free Report) .

NextGen’s long-term earnings growth rate is estimated at 8%. The company presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Surmodics’ long-term earnings growth rate is estimated at 10%. The company presently carries a Zacks Rank #2.

Thermo Fisher’s long-term earnings growth rate is estimated at 15.5%. It currently carries a Zacks Rank #2.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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Thermo Fisher Scientific Inc. (TMO) - free report >>

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OPKO Health, Inc. (OPK) - free report >>

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