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Opko Health (OPK) Marked As A Barbarian At The Gate

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Opko Health (OPK) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Opko Health as such a stock due to the following factors:

  • OPK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $34.0 million.
  • OPK has traded 1.7 million shares today.
  • OPK traded in a range 232.2% of the normal price range with a price range of $0.84.
  • OPK traded above its daily resistance level (quality: 78 days, meaning that the stock is crossing a resistance level set by the last 78 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on OPK:

Opko Health, Inc., a pharmaceutical and diagnostics company, engages in the discovery, development, and commercialization of novel and proprietary technologies. It operates in two segments, Pharmaceuticals and Diagnostics. Currently there are 3 analysts that rate Opko Health a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Opko Health has been 4.0 million shares per day over the past 30 days. Opko Health has a market cap of $3.7 billion and is part of the health care sector and health services industry. The stock has a beta of 0.90 and a short float of 29.3% with 13.72 days to cover. Shares are up 10.8% year-to-date as of the close of trading on Thursday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Opko Health as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and weak operating cash flow.

Highlights from the ratings report include:

  • OPK's very impressive revenue growth greatly exceeded the industry average of 15.7%. Since the same quarter one year prior, revenues leaped by 75.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • OPK's debt-to-equity ratio is very low at 0.26 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.02, which clearly demonstrates the ability to cover short-term cash needs.
  • 46.83% is the gross profit margin for OPKO HEALTH INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -290.67% is in-line with the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Biotechnology industry. The net income has significantly decreased by 522.0% when compared to the same quarter one year ago, falling from -$9.65 million to -$60.00 million.
  • Net operating cash flow has significantly decreased to -$11.47 million or 495.32% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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