OPKO Health, Inc. (OPK Quick QuoteOPK - Free Report) is well-poised for growth in the coming quarters, courtesy of its potential in Rayaldee. The optimism led by solid third-quarter 2023 performance and few notable agreements are expected to contribute further. However, stiff competition and concerns regarding overdependence on Rayaldee persist.

Over the past year, this Zacks Rank #3 (Hold) stock has gained 18.5% against the 6.2% decline of the industry. The S&P 500 has witnessed 15.2% growth in the said time frame.

The renowned multinational biopharmaceutical and diagnostics company has a market capitalization of $1.24 billion. It projects 8% growth for 2024 and expects to maintain its strong performance. OPKO Health’s earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters, missed once and broke even in the other, the average surprise being 26.6%.

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Let’s delve deeper.

Potential in Rayaldee: We are upbeat about OPKO Health’s Rayaldee business. Rayaldee is the first and only therapy approved by the FDA for the treatment of secondary hyperparathyroidism in adults with stage three or four chronic kidney disease and vitamin D insufficiency. For the nine months ended Sep 30, 2023, net product revenues from sales of Rayaldee were up 19.2%.

Strategic Agreements: OPKO Health has entered into a slew of agreements over the past few months. On third-quarter 2023 earnings call in November, management confirmed that GLP-2 to treat short bowel syndrome is being developed into a once-daily oral form jointly with Entera. OPKO Health’s management is also considering working with Entera on one of its oxyntomodulin peptides for weight loss.

Strong Q3 Results: OPKO Health’s better-than-expected third-quarter 2023 revenues buoy our optimism. Its confirmation that NGENLA (somatrogon) has been approved in 48 markets, including the United States, Japan, EU Member States, Canada and Australia, looks promising. Also, its continued sales by Pfizer in more than 23 countries, including all priority global markets, raises our optimism about OPKO Health.

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 competitive with 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 substantially depends on its ability to effectively commercialize Rayaldee. The failure to successfully commercialize Rayaldee would have a material adverse effect on the company’s business.

Estimate Trend

OPKO Health is witnessing a negative estimate revision trend for 2023. In the past 90 days, the Zacks Consensus Estimate for its loss per share has widened from 20 cents to 25 cents.

The Zacks Consensus Estimate for the company’s fourth-quarter 2023 revenues is pegged at $178.3 million, suggesting a 3.8% fall from the year-ago quarter’s reported number.

Key Picks

Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA Quick QuoteDVA - Free Report) , DexCom, Inc. (DXCM Quick QuoteDXCM - Free Report) and Integer Holdings Corporation (ITGR Quick QuoteITGR - Free Report) .

DaVita, sporting a Zacks Rank #1 (Strong Buy), has an estimated long-term growth rate of 18.3%. DVA’s earnings surpassed estimates in all the trailing four quarters, with an average surprise of 36.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.

DaVita’s shares have gained 39.1% compared with the industry’s 3.8% rise in the past year.

DexCom, carrying a Zacks Rank of 2 (Buy) at present, has an estimated long-term growth rate of 33.6%. DXCM’s earnings surpassed estimates in all the trailing four quarters, with an average of 36.4%.

DexCom’s shares have lost 3.9% compared with the industry’s 6.2% decline in the past year.

Integer Holdings, flaunting a Zacks Rank of 1 at present, has an estimated long-term growth rate of 15.8%. ITGR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 11.9%.

Integer Holdings’ shares have rallied 18.9% against the industry’s 6.2% decline in the past year.