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There's been a notable change in appetite for OPKO Health, Inc. (NASDAQ:OPK) shares in the week since its third-quarter report, with the stock down 18% to US$3.52. Results were mixed, with revenues of US$428m exceeding expectations, even as earnings per share (EPS) came up short. Statutory earnings were US$0.04 per share, -9.1% below whatthe analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the latest results, OPKO Health's five analysts are now forecasting revenues of US$1.55b in 2021. This would be a major 33% improvement in sales compared to the last 12 months. OPKO Health is also expected to turn profitable, with statutory earnings of US$0.27 per share. Before this earnings report, the analysts had been forecasting revenues of US$1.47b and earnings per share (EPS) of US$0.19 in 2021. So it seems there's been a definite increase in optimism about OPKO Health's future following the latest results, with a massive increase in the earnings per share forecasts in particular.
It will come as no surprise to learn that the analysts have increased their price target for OPKO Health 61% to US$8.00on the back of these upgrades. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic OPKO Health analyst has a price target of US$10.00 per share, while the most pessimistic values it at US$6.50. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that OPKO Health's rate of growth is expected to accelerate meaningfully, with the forecast 33% revenue growth noticeably faster than its historical growth of 4.9%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 21% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that OPKO Health is expected to grow much faster than its industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards OPKO Health following these results. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn't be too quick to come to a conclusion on OPKO Health. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for OPKO Health going out to 2024, and you can see them free on our platform here..
Don't forget that there may still be risks. For instance, we've identified 2 warning signs for OPKO Health that you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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