Opko Health Inc. (OPK): New Test Can Boost Revenues Tenfold, One Insider is Buying

1) CEO & Chairman Dr. Phillip Frost has been buying in bulk. Opko and Frost go together like Bert and Ernie, as the pharma magnate has been with the company since its inception and IPO, the latter of which occurred in early 2011. Frost has since accumulated 119.5 million shares, good for a whopping 40.1% share of his company’s float.

In 2012 alone, Frost has amassed close to 11 million shares of Opko, worth an approximate $51.4 million. Over this same time, there have been zero insider sales in Opko. This is about as bullish as insider trading sentiment can get in a particular company, but don’t take our word for it, check out the mammoth transactions for yourself.

2) The markets have responded well. Over the past six months, shares of Opko are up close to 9%, likely on the back of Frost’s continued confidence in the stock and the company’s accelerated development of 4Kscore. Regarding the latter, in fact, OPK closed at $4.16 on Oct 1st, the launch date of 4Kscore in Europe. In a little over 12 weeks since, investors have pushed shares up to the $4.80 range – an appreciation of more than 15%.

3) Revenues can increase tenfold. For bullish investors who are peeved they didn’t follow Frost’s lead sooner, Opko still has intriguing growth prospects. The company has failed to turn a profit in each of the last three quarters, exhibiting its last positive EPS in its fiscal fourth quarter last year, but 4Kscore can have a meaningful effect on the company’s top line.

According to Bloomberg, Michael King of Nomura Code Securities estimates that the average price of the ConfirmMDx test from competitor MDXHealth SA (PINK:MXDHF) is “about $146 per tissue sample.” Assuming that Opko’s 4Kscore test maintains this cost structure, the company can see a revenue increase of over tenfold from current levels. We’ll explain.