OPKO Health Inc. (OPK) in Miami, Fla., is a global biopharmaceutical and diagnostics company that aims to achieve industry-leading positions in large, rapidly expanding industries by maximizing its experience in discovery, development, and commercialization, and its unique and patented technology. In May, the company acquired ModeX Therapeutics, Inc., and by doing so obtained exclusive immunotherapy technologies. Also, during the reported quarter, Pfizer Inc. (PFE) released OPKO Health's NGENLA injectable in Germany, Japan, Canada, and Australia, and is on track to make it accessible in the United States.

However, the company's shares are down 23.6% in price over the past year and 42.6% year-to-date to close yesterday's trading session at $2.76.

OPK’s year-over-year decline in its top line and its sustained loss per share are causes for concern. In addition, decreasing diagnostics revenues due to lower BRL testing numbers and a fall in RAYALDEE sales are also concerning.

Here is what could shape OPK's performance in the near term:

Inadequate Financials

OPK's total revenue declined 39.6% year-over-year to $329.2 million for the first quarter ended March 31, 2022. Its operating loss came in at $72.4 million compared to  $28.5 million in operating income  in the prior-year quarter. The company reported a net loss of $55.4 million compared to $31.1 million in net income in the first quarter of 2021. Its loss per share amounted to $0.08. In addition, its cash and cash equivalents declined 24.1% for the three months ended March 31, 2022, to $102.3 million.

Poor Profitability

OPK's 1.81% trailing-12-month CAPEX/Sales  is 58.1% lower than the 4.31% industry average. Its 26.3% trailing-12-month gross profit margin is 52.8% lower than the 55.6% industry average. Also, its trailing-12-month ROA, ROC, and net income margin are negative 5.1%, 3.8%, and 7.5%, respectively.

POWR Ratings Reflect Bleak Outlook

OPK has an overall D rating, which equates to Sell in our proprietary POWR Ratings system. The POWR ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. OPK has a C for Stability and Quality. The stock 1.89 beta is in sync with the Stability grade. In addition, the company's poor profitability is consistent with the Quality grade.

Of the 52 stocks in the D-rated Medical – Diagnostic/Research industry, OPK is ranked #38.

Beyond what I have stated above, you can view OPK ratings for Growth, Value, Momentum, and Sentiment here.

Click here to checkout our Semiconductor Industry Report for 2022

Bottom Line

OPK's deteriorating financial performance and negative profit margins are concerning. In addition, analysts expect its EPS to decline 300% in the next quarter (ending June 2022) and 380% in the current year. Furthermore, the stock is currently trading below its 50-day and 200-day moving averages of $3.10 and $3.62, respectively, indicating a downtrend. So, we think the stock is best avoided now.

How Does OPKO Health Inc. (OPK) Stack Up Against its Peers?

While OPK has an overall D rating, one might want to consider its industry peers, Global Cord Blood Corporation (CO), Qiagen N.V. (QGEN), and Agilent Technologies Inc. (A), which have an overall A (Strong Buy) rating.

OPK shares rose $0.01 (+0.36%) in premarket trading Tuesday. Year-to-date, OPK has declined -42.62%, versus a -13.03% rise in the benchmark S&P 500 index during the same period.

Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.

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