Trade-Ideas: Opko Health (OPK) Is Today's

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.

Trade-Ideas LLC identified Opko Health ( OPK) as a "dead cat bounce" (down big yesterday but up big today) 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 $98.1 million.
  • OPK has traded 102,033 shares today.
  • OPK is up 3.5% today.
  • OPK was down 15% yesterday.

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More details on OPK:

OPKO Health, Inc., a biopharmaceutical and diagnostics company, engages in the discovery, development, and commercialization of novel and proprietary technologies in the United States and internationally. It operates through two segments, Pharmaceuticals and Diagnostics. Currently there are 3 analysts that rate Opko Health a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Opko Health has been 2.8 million shares per day over the past 30 days. Opko Health has a market cap of $8.5 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.49 and a short float of 65.5% with 7.35 days to cover. Shares are up 91.4% year-to-date as of the close of trading on Wednesday.

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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 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 deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 21.5%. Since the same quarter one year prior, revenues rose by 35.1%. 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 0.15 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, OPK has a quick ratio of 2.02, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for OPKO HEALTH INC is rather high; currently it is at 68.55%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -389.28% 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 162.9% when compared to the same quarter one year ago, falling from -$44.55 million to -$117.11 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Biotechnology industry and the overall market, OPKO HEALTH INC's return on equity significantly trails that of both the industry average and the S&P 500.

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