OPKO Health, Inc.'s (NASDAQ:OPK) Has Found A Path To Profitability

Simply Wall St
·3-min read

We feel now is a pretty good time to analyse OPKO Health, Inc.'s (NASDAQ:OPK) business as it appears the company may be on the cusp of a considerable accomplishment. OPKO Health, Inc., a healthcare company, engages in the diagnostics and pharmaceuticals businesses in the United States, Ireland, Chile, Spain, Israel, Mexico, and internationally. The US$2.8b market-cap company posted a loss in its most recent financial year of US$315m and a latest trailing-twelve-month loss of US$200m shrinking the gap between loss and breakeven. As path to profitability is the topic on OPKO Health's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for OPKO Health

Consensus from 5 of the American Biotechs analysts is that OPKO Health is on the verge of breakeven. They expect the company to post a final loss in 2019, before turning a profit of US$30m in 2020. The company is therefore projected to breakeven around 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2020? Working backwards from analyst estimates, it turns out that they expect the company to grow 29% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

We're not going to go through company-specific developments for OPKO Health given that this is a high-level summary, though, 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 we’d like to point out is that The company has managed its capital judiciously, with debt making up 18% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of OPKO Health which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at OPKO Health, take a look at OPKO Health's company page on Simply Wall St. We've also compiled a list of essential aspects you should further research:

  1. Valuation: What is OPKO Health 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 OPKO Health is currently mispriced by the market.

  2. 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 background.

  3. 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.

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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