OPKO Health, Inc. (OPK Quick QuoteOPK - Free Report) is well poised for growth in the coming quarters, backed by its potential in Rayaldee. A robust first-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 29.4% compared with 24% fall of the industry and 16.8% decline of the S&P 500.

The renowned multinational biopharmaceutical and diagnostics company has a market capitalization of $1.80 billion. It projects 27.3% 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%.

Image Source: Zacks Investment Research

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.

Strategic Agreements: OPKO Health has entered into a slew of agreements over the past few months, raising our optimism. In May, it announced the acquisition of privately held biotechnology company, ModeX Therapeutics, Inc.

Also in May, OPKO Health’s wholly owned subsidiary, GeneDx, LLC, was acquired by artificial intelligence-driven genomic and clinical data intelligence platform company, Sema4. The buyout deal was announced in January.

Strong Q1 Results: OPKO Health’s solid first-quarter 2022 results buoy our optimism. Uptick in year-over-year Pharmaceuticals revenues is encouraging. Improvements in genomic test reimbursement and an increase in clinical and genomic test volumes are promising. OPKO Health’s strength in its women's health and oncology businesses also augurs well. Robust adoption of the company’s digital health services and the newly-launched Scarlet platform also buoy our optimism.

Downsides

Stiff Competition: The pharmaceutical, diagnostic, and laboratory testing industries are highly competitive and require an ongoing, extensive search for technological innovation. Numerous companies, including major pharmaceutical companies, specialty pharmaceutical companies and specialized biotechnology companies, are engaged in the development, manufacture and marketing of pharmaceutical products that can be competitions for those that 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. 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 widened from a loss of 9 cents per share to a loss of 22 cents.

The Zacks Consensus Estimate for the company’s second-quarter 2022 revenues is pegged at $319.5 million, suggesting a 27.8% 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 Quick QuoteAMN - Free Report) , Patterson Companies, Inc. (PDCO Quick QuotePDCO - Free Report) and McKesson Corporation (MCK Quick QuoteMCK - Free Report) .

AMN Healthcare, flaunting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 1.1%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 15.6%.

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

AMN Healthcare has gained 26.2% against the industry’s 32.9% fall in the past year.

Patterson Companies, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 9.6%. PDCO’s earnings surpassed estimates in all the trailing four quarters, the average beat being 16.5%.

Patterson Companies has gained 2.1% against the industry’s 11.3% fall over the past year.

McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 9.5%. MCK’s earnings surpassed estimates in three of the trailing four quarters, the average beat being 19.5%.

McKesson has gained 63.3% against the industry’s 11.3% fall over the past year.