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Opko Health Inc. (OPK) continues to drop; Barrington Research maintains Outperform

By Austin Angelo

In the past three months, Opko Health Inc. (NYSE:OPK) has dropped 55%. Year-to-date, the stock has seen a drop of 40%. However, the stock has seen huge insider activity with Chairman and CEO Phillip Frost buying the stock in huge volumes. Michael Petusky from Barrington Research weighed in on the stock on September 28.

Petusky has maintained an Outperform rating for the stock; however he’s reduced his price target slightly to $19, from $20. As per the analyst, the reasons behind the declining stock price are certain company-specific issues and a general weakness in the pharmaceutical space. Investors were apprehensive about the company’s recently concluded acquisition of Bio-Reference Laboratories, a full-service clinical diagnostic laboratory.

The analyst is optimistic about the acquisition, as he believes it has provided Opko with profitable revenue of $1 billion. Additionally, the acquisition has also transformed Opko from a development stage company into one with meaningful operations. However, he stated that the company needs to explain the rationale behind this acquisition.

Some of the other factors behind the drop include, “the future of the company’s 4Kscore test for prostate disease, a perceived delay in the commercialization timetable of the company’s long-lasting human growth hormone products (adult and pediatric indications), and questions about Rayaldee’s upside.” In July, the company had sought approval from the FDA for Rayaldee, an oral vitamin D prohormone treatment being developed for SHPT in patients with stage 3 or 4 CKD and vitamin D insufficiency.

Petusky is also positive about the 4K Score test, which if successful will make biopsies redundant. He also believes the 4K Score test offers significant commercial potential and can boost Opko’s performance.

Overall, Michael Petusky has a 50% success rate recommending stocks and a +1.5% average return per recommendation when measured over a one-year horizon and no benchmark.

Out of three analysts polled by TipRanks within the past three months, two are bullish on Opko and one is neutral. The average 12-month price target on the stock is $16.67, marking a 94.29% potential upside from where shares last closed.