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?
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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.
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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