Opko Health Inc (OPK)

[WiseFool]

Opko / Pfizer Partnership Ready to Flourish

Wednesday April 22, 2015

Robert Borowski
Analyst Opinion

Opko has Friends in High Places; Pfizer Partnership Ready to Flourish

Opko Health, Inc. Daily: OPK saw massive share price appreciation late last year when Pfizer struck a deal with OPK to jointly develop products. Once regulatory clearance was obtained, the share price found a new support level of around the $14 mark. As this partnership flourishes, OPK’s share price should see growth.

Recent news of insider buying strengthens management’s belief that the partnership and the company will be profitable. The CEO, Dr. Frost, recently resigned from his chairman position at Teva Pharmaceuticals to focus on running his company. This is great news for current and prospective shareholders.

The long term potential for OPK is excellent having Pfizer backing the company and its products. On the short term, it is believed that the share price will hover around the $14 support and only grow as positive news is announced. Currently, there is no expected news in the short term leading to the prediction of a flat pattern.

OPK: The partnership with Pfizer is the best thing that could have happened for this little known biopharma.

A brief recap of Opko Health, Inc.: OPKO Health Inc. is a multi-national biopharmaceutical and diagnostics company. The Company is involved in developing a range of solutions to diagnose, treat and prevent various conditions, including point of-care tests, laboratory developed tests (LDTs), molecular diagnostics tests, and proprietary pharmaceuticals and vaccines. The Company operates through two divisions: Diagnostics and Pharmaceutical. It has established pharmaceutical platforms in Chile, Spain, Mexico and Uruguay. It has also established pharmaceutical operations in Brazil. The Company has developed a diagnostic instrument system that provides rapid, high performance blood test results and enables tests to be run in point-of-care
settings.

Opko Health is expected to release next quarter earnings on May 8, 2015. The street estimates an EPS of $-0.08; last quarter, OPK missed earnings estimates by $0.06. Meeting or beating estimates could be a potential catalyst to send the share price above the current resistance level of $15, which has been tested multiple times in March 2015. Investors should watch for strong volume moving the price above that resistance as a buy signal for further growth. Surpassing that resistance level may also trigger a short squeeze as stop prices for short position are likely in the $15 to $16 range; on high volume this could see the price appreciate significantly. Beating earnings estimates may be a sign of a flourishing relationship with Pfizer, which investors would view as very positive. This partnership may similarly be test of OPK as a potential acquisition target by Pfizer. The future of the company rests on its ability to take advantage of the opportunity given and only time will tell whether the company can execute. The signs, which include the CEO resigning form a chairman position at another company and purchasing more shares of OPK, suggest that the captain running the show is confident in his company, enough so that he invests his own money into it. That should give the investing community more confidence in OPK.

Summary and Conclusions:

This little known biopharmaceutical has been shining bright in the eyes of many investors when Pfizer and OPK announced a partnership to develop high value growth products. That news alone more than doubled the share price in over two months to a support level of $14; far exceeding its 200 – day SMA of $10.40. A resistance at $15 has also formed and been tested several times in the past month. If the share price can break through that resistance and cause a short squeeze, the share price should benefit significantly. As an investor, watch for the share price crossing that resistance on high volume as an opportunity for a long position entry point.