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Why Opko Health Shares Shriveled by Nearly 8% on Friday

By Eric Volkman – Jul 30, 2021 at 5:24PM

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The coronavirus stock didn't impress with its Q2 results.

What happened

The stock of Opko Health (OPK -2.00%) didn't have its healthiest day on Friday, falling by 7.8% in the wake of the company's latest earnings report.

So what

For its second quarter, Opko Health posted $442.4 million in revenue, nearly 47% higher on a year-over-year basis. That was fueled by volume increases in the company's diagnostic products, which include COVID-19 testing kits (the company's smaller pharmaceutical operations recorded a 22% gain). Largely on the basis of those testing products, however, analysts were collectively expecting nearly $456.4 million on the top line.

A woman seated on a couch, worrying while looking at a thermometer.

Image source: Getty Images.

More discouragingly, the healthcare company flipped into the red on the bottom line with a $16.2 million ($0.03 per share) quarterly loss; the year-ago result was a profit of $33.7 million. The prognosticators were estimating a per-share net profit of $0.02. It should be noted, though, that a share issue linked to convertible notes resulted in a one-time loss of more than $11 million, affecting the bottom-line figure.

Now what

Opko Health's performance led to several price target cuts from analysts. Piper Sandler's Edward Tenthoff reduced his to $5 per share, exactly half of his previous $10, although he maintained his overweight (buy) recommendation. Barrington analyst Michael Petusky shaved his target to $6 from the preceding $8, yet also held his outperform (buy) recommendation.

This might be a bit of an overreaction; Petusky, for one, is basing his move on a slowdown of COVID testing volumes. With the delta variant running roughshod in many locales, that analysis may be premature.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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