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OPKO Health (OPK) Up 5.7% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for OPKO Health (OPK - Free Report) . Shares have added about 5.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is OPKO Health due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

OPKO Health reported second-quarter 2018 loss of 4 cents per share, narrower than the Zacks Consensus Estimate of a loss of 7 cents. The figure was flat with the year-ago quarter.

Revenues totaled $263.7 million, surpassing the Zacks Consensus Estimate of $260 million. However, on a year-over-year basis, revenues dropped 9.9%.

Over the past year, shares of OPKO Health have declined 14.6% compared with the industry’s fall of 5.1%.

The stock carries a Zacks Rank #3 (Hold).

Segment Details

The Florida-based diagnostics and pharmaceuticals company reports through three major segments — services, products and transfer of intellectual property.

Revenues from services grossed $216.1 million in the reported quarter, down 7.6% year over year.

Revenues from product inched down 1.7% to $28.5 million in the quarter. Per management, revenues from products include $4.8 million contribution from RAYALDEE.

Revenues from transfer of intellectual property came in at $19.1 million, down significantly from the year-ago quarter’s $29.7 million.

RAYALDEE Update

Per management, total RAYALDEE prescriptions improved 467% in the second quarter on a year-over-year basis. The company’s Switzerland-based partner, Vifor Fresenius received approval from Health Canada to market RAYALDEE in the country. Management confirmed that RAYALDEE is currently available to 83% of the overall insured population and 53% of the Medicare population.

Margin Analysis

Gross profit in the reported quarter came in at $113.6 million, down 16% from the prior-year quarter. Gross margin was 43.1%, down 310 basis points (bps) in the quarter.

In the second quarter, OPKO Health incurred an operating loss of $5.1 million, which narrowed considerably from the year-ago quarter’s $25.8 million.

Guidance

OPKO Health did not provide any guidance for 2018.

However, for the third quarter of 2018, management expects revenues from services between $200 million and $220 million.

Product revenues are expected within $28-$32 million, including revenues for RAYALDEE between $5.7 million and $6.5 million.

Revenues from transfer of intellectual property are anticipated in the band of $80 million and $23 million.

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted -8.7% due to these changes.

VGM Scores

At this time, OPKO Health has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, OPKO Health has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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