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OPKO Health, Inc.'s (NASDAQ:OPK): OPKO Health, Inc., a healthcare company, engages in the diagnostics and pharmaceuticals business in the United States, Ireland, Chile, Spain, Israel, Mexico, and internationally. The company’s loss has recently broadened since it announced a -US$153.0m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$190.7m, moving it further away from breakeven. As path to profitability is the topic on OPK’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for OPK, its year of breakeven and its implied growth rate.
According to the 3 industry analysts covering OPK, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$23m in 2021. Therefore, OPK is expected to breakeven roughly 2 years from now. How fast will OPK have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 70% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, OPK may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for OPK given that this is a high-level summary, but, bear in mind that generally biotechs, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing I’d like to point out is that OPK has managed its capital judiciously, with debt making up 21% of equity. This means that OPK has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on OPK, so if you are interested in understanding the company at a deeper level, take a look at OPK’s company page on Simply Wall St. I’ve also put together a list of key aspects you should look at:
- Valuation: What is OPK worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether OPK is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on OPKO Health’s board and the CEO’s back ground.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.