Monday, April 08, 2013
Investing in Next Generation Healthcare
By Jim Cramer TheStreet Action Alerts Plus
Opko Health (NYSE:OPK) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, good cash flow from operations, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.
OPK's very impressive revenue growth greatly exceeded the industry average of 6.9%. Since the same quarter one year prior, revenues leaped by 180.7%. 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.
Compared to its closing price of one year ago, OPK's share price has jumped by 59.61%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, OPK should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
Net operating cash flow has increased to -$5.73 million or 13.05% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -33.36%.
49.60% is the gross profit margin for OPKO HEALTH INC which we consider to be strong. 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 -3.37% is in-line with the industry average.
OPK's debt-to-equity ratio is very low at 0.11 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.97 is somewhat weak and could be cause for future problems.
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. Opko Health has a market cap of $2.47 billion and is part of the health care sector and health services industry.
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