Barrington Research: With SEC Litigation Settled, Opko Health Should Outperform

Opko Health Inc. OPK lost around 57 percent over the span of a few months after the SEC named the company as a defendant in a lawsuit alleging a "pump-and-dump" stock trading by CEO and Chairman Dr. Phil Frost.

The conclusion of the litigation — which ended with the company agreeing to pay a $100,000 penalty and Frost paying a $5-million fine — has been positive for the company’s shares, which have rallied more than 40 percent since December, according to Barrington Research.

The Analyst

Analyst Michael Petusky maintains an Outperform rating on Opko Health with a $7 price target. 

The Thesis

With the SEC issue behind it, Opko Health can now fully focus on growth, improving operations and making progress in its pre-commercial product pipeline, Petusky said in a Wednesday note. 

Opko Health has named Jon Cohen as executive chairman and Geoff Monk as president of its BioReference Laboratories business, which has been a major contributor to the company’s financial results.

While both moves appear positive, “we are particularly encouraged by Mr. Monk’s promotion given the fact that he has been charged with driving improvement in BRL’s operations since he was hired in May 2018,” the analyst said. 

Opko Health could generate revenue of $239.1 million in Q4, with BRL contributing approximately $190.3 million, according to Barrington. The company’s EPS for the quarter is projected at a negative 7 cents per share, Petusky said. 

Price Action

Opko Health shares were up 2.49 percent at $3.71 at the time of publication. 

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