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Reasons to Retain OPKO Health (OPK) Stock in Your Portfolio

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OPKO Health, Inc. (OPK - Free Report) is well poised for growth in the coming quarters, backed by its potential in Rayaldee. A robust fourth-quarter 2021 performance, along with a few regulatory approvals, is expected to contribute further. Forex woes and concerns regarding overdependence on Rayaldee persist.

Over the past year, this Zacks Rank #3 (Hold) stock has lost 17.4% compared with an 1.4% fall of the industry. The S&P 500 has risen 14.9% in the same time frame.

The renowned multinational biopharmaceutical and diagnostics company has a market capitalization of $2.42 billion. It projects 133.3% 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 -4.2%.

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Let’s delve deeper.

Potential in Rayaldee: We are upbeat about OPKO Health’s Rayaldee business. In February, OPKO Health announced that Vifor Fresenius Medical Care Renal Pharma has initiated the commercial launch of RAYALDEE (extended-release calcifediol) in Germany, the first launch of RAYALDEE outside the United States.

In December 2021, OPKO Health announced preliminary top-line results from its Phase 2 trial with Rayaldee to treat mild-to-moderate COVID-19, which indicates that vitamin D repletion therapy can accelerate recovery from COVID-19.

Regulatory Approvals: OPKO Health’s progress on the regulatory front for its products raises our optimism. In February, the company and Pfizer Inc. gained marketing authorization from the European Commission for the next-generation long-acting recombinant human growth hormone NGENLA (somatrogon). The European Union (EU) marketing authorization is valid in all EU member states, as well as in Iceland, Norway and Liechtenstein.

OPKO Health, in January, announced that the next-generation long-acting growth hormone injection, NGENLA (somatrogon) Inj. 24 mg Pens and 60 mg Pens, has been approved by the Ministry of Health, Labour and Welfare in Japan.

Strong Q4 Results: OPKO Health’s solid fourth-quarter 2021 results buoy our optimism. Uptick in year-over-year Pharmaceuticals revenues is encouraging. Increase in volume in the urology business is impressive. BioReference Laboratories’ robust COVID-19 testing volume in the reported quarter raises our optimism. Regulatory approvals for the company’s products auger well for the company.

Downsides

Forex Woes: OPKO Health derives a significant portion of its consolidated net revenues from international sales, which subjects the company to risks related to fluctuations in currency exchange rates. The company, through its subsidiaries, operates in a wide variety of jurisdictions. Certain countries in which it operates or may operate in have experienced geopolitical instability, economic problems and other uncertainties from time to time.

Overdependence on Rayaldee: OPKO Health’s commercial launch of Rayaldee, which is the company’s only pharmaceutical product approved for marketing in the United States, began in November 2016. The company’s ability to generate revenues from product sales and achieve profitability is substantially dependent on its ability to effectively commercialize Rayaldee. 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 for its earnings has moved from 3 cents per share to a loss of 9 cents.

The Zacks Consensus Estimate for the company’s first-quarter 2022 revenues is pegged at $309.8 million, suggesting a 43.2% fall from the year-ago quarter’s reported number.

Key Picks

A few stocks from the broader medical space that investors can consider are AMN Healthcare Services, Inc. (AMN - Free Report) , Allscripts Healthcare Solutions, Inc. (MDRX - Free Report) and Henry Schein, Inc. (HSIC - Free Report) .

AMN Healthcare has an estimated long-term growth rate of 16.2%. AMN’s earnings surpassed estimates in the trailing four quarters, the average surprise being 20%. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AMN Healthcare has gained 38.5% against the industry’s 53.5% fall over the past year.

Allscripts, carrying a Zacks Rank #2 (Buy), has an estimated long-term growth rate of 16.3%. MDRX’s earnings surpassed estimates in the trailing four quarters, the average surprise being 64.8%.

Allscripts has gained 44.2% against the industry’s 47.3% fall over the past year.

Henry Schein has an estimated long-term growth rate of 11.8%. HSIC’s earnings surpassed estimates in the trailing four quarters, the average surprise being 25.5%. It currently flaunts a Zacks Rank #1.

Henry Schein has gained 25.9% compared with the industry’s 7.6% rise over the past year.

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