$heff's $tation of $tocks & $olid DD

[bra1loga]

OPK ~

An Analysis! Valuation PE 15 or 25? Stock at $45, $68 or $91!

Update

A big question is how the market valuate OPK. If they valuate the company as a biotech company than a valuation would be much higher than as a diagnostic company.

I am expecting mediam term (up to 4 years) a revenue of 4-6 bn (average 5 bn). Alone 2-3 bn in 2016.

Implication at 5 bn revenue and $3 earnings

a) As a pure diagnostic company Opko would be evaluated at a minimum pe of 15. This implies a stock price of $45. But that is not the real definition of OPK. Therefore thats the worst case, if the eps assumption is correct.

b) as a pure biotech company, OPK woud be evaluated probably with a p/s approach. REGN has 3.8 bn revenue and a market cap of 61.4 bn (p/s 16). Let us assume thats high. Big pharma are valued with around 8-12. When OPK has a revenue of 5 bn with a p/s of 10 than the company should be valued at 50 bn. Currently is the market cap of OPK at 5.93 bn. Means 8.4 times (50 bn/5,93 bn) from now is suitable. The stock would be cost $91. Optimistic case only on pure valuation figures.

c) OPK is not a pure biotech company. Assume 50% is biotech and the rest the other products. OPK should cost 45+91 dividend by 2 = $68 price target. Real case.

d) OPK is not a company who stands still. So calcualte a factor x to the $68 price target.In my revenue calcualtion are not the later pipeline components. On thie approach includes BRLI, 4Kscore, Rayaldee, Rolapitant/Varubi, Alpharen and hGH-PFE.