What happened

Shares of OPKO Health (NASDAQ:OPK) went up 21.1% in June, according to data provided by S&P Global Market Intelligence. Seeing a healthcare company increase that much in a month -- or even a day -- isn't all that unusual, but there's usually clinical trial data, regulatory approvals, or solid earnings reports -- as OPKO had in May -- to justify the jump in the stock price

But OPKO issued just one press release during June, and it simply pointed out that the company had completed enrollment in a phase 2b trial testing OPK88003 as a treatment for type 2 diabetes -- not exactly a stock-moving event.

Doctor talking to patient at a table

Image source: Getty Images.

So what

The news-less rise in OPKO's stock price likely has to do with a change in investor sentiment. Shares fell after a Medicare Administrative Contractor issued a draft local coverage determination, finding that OPKO's 4Kscore diagnostic test shouldn't be covered by Medicare. While the lack of coverage was bad news if the draft coverage became permanent, the major drop appears to be an overreaction that savvy investors have taken advantage of.

Investors may also be jumping in ahead of a potential approval for OPKO's prostate specific antigen (PSA) test that's under review by the Food and Drug Administration. The PSA test and others OPKO is developing run on its Claros 1 immunoassay analyzer that doctors can install in their offices to avoid having to send patients to laboratories for diagnostic tests.

Now what

Shares are up another 32% so far in July. While OPKO has potential to expand revenue from its new offerings, it seems much of that growth is already priced in and investors should be careful buying at these inflated prices.