On Monday, Opko Health Inc. (NASDAQ:OPK) shares edged slightly higher after Jefferies and Piper Sandler analysts issued upbeat statements following Friday’s decline. The OPK stock price slipped more than 4% after it announced that the Food and Drug Administration (FDA) had extended the review period for the Biologics License Application (BLA) for Somatrogon.
The once-weekly long-acting recombinant human growth hormone is being developed jointly with Pfizer Inc. (NYSE:PFE) for the treatment of growth hormone deficiencies (GHD) in pediatric patients.
So should you buy Opko shares in Q4 2021?
Jefferies analyst Maury said there is a lack of clarity regarding the FDA’s long-term plans based on the Somatrogon data provided so far, adding that the long wait increases risk. However, he maintained a buy rating with a price target of $6.50, implying an upside potential of 73%.
On the other hand, Piper Saddler analyst Edward Tenthoff reiterated an overweight rating with a price target of $5.00 per share, citing optimism in Somatrogon approval.
Despite the positive sentiment issued by the analysts, the stock trades at a relatively steep P/E ratio of 33.78. Moreover, although analysts expect OPK earnings to grow by 109% this year, they have also forecasted a decline of about 900% next year.
Therefore, it may be worth waiting for more Somatrogon data to come through, including an update from the FDA before buying Opko shares.
Source – TradingView
The pullback seems far from over
Technically, although Opko shares plunged more than 4% on Friday, Monday’s slight gain offers no confidence for a significant rebound. Moreover, the stock is yet to hit the oversold conditions of the 14-day RSI, leaving room for more downward movement.
Therefore, investors could target extended declines at approximately $3.59 or lower at $3.32, while $3.93 and $4.22 are crucial resistance levels. OKP shares traded at $3.77 as of this writing.
Bottom line: Opko’s short-term decline seems poised to continue
In summary, although Opko shares have pulled back significantly, the stock seems to be facing strong resistance from the 100-day moving average.
Therefore, with the extension of the review period for Somatrogon adding time risk, it may not be too late to short OPK shares.
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