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$3.8b market-cap company’s loss lessened since it announced a US$315m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$114m, as it approaches breakeven. Many investors are wondering about the rate at which OPKO Health will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
OPKO Health is bordering on breakeven, according to the 5 American Biotechs analysts. They expect the company to post a final loss in 2020, before turning a profit of US$123m in 2021. Therefore, the company is expected to breakeven roughly 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 24% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving OPKO Health's growth isn’t the focus of this broad overview, but, keep in mind that generally a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 15% 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.
This article is not intended to be a comprehensive analysis on OPKO Health, so if you are interested in understanding the company at a deeper level, take a look at OPKO Health's company page on Simply Wall St. We've also compiled a list of relevant aspects you should further examine:
- 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.
- 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.
- 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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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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