Should You Exit From This NASDAQ-Listed Health Care Technology Stock – OPRX

Feb 17, 2022 12:00 AM PST | Team Kalkine
Should You Exit From This NASDAQ-Listed Health Care Technology Stock – OPRX

OptimizeRx Corporation

OPRX Details

OptimizeRx Corporation (NASDAQ: OPRX) is a digital health company that offers life sciences support to patients and clinicians. It encourages patients to stick to their treatment plans by making them more affordable.

Why should Investors Sell?

  • Long Cash Conversion Days: The company has a long Cash Conversion Cycle (Days) compared to the industry, which means it takes longer to convert inventory to cash. In Q3FY21, its Cash Cycle was 99.0 days, compared to the industry median of 47 days.
  • Margin Stress: In Q3FY21 (ended September 30, 2021), the company's gross margin was 56.3%, compared to the industry norm of 62.1%. The company further witnessed a fall in gross margins from 59.0% in Q2FY21 to 56.3% in Q3FY21, indicating a substantial increase in the cost of revenues.
  • Technical Bearish Indicators: The company's current market price was USD 48.87, trailing below 50 and 200 DMA along with death crossover. Also, the 14-days RSI of ~53.02, approaching the overbought territory. 

Valuation Methodology: Price/Earnings Multiple Based Relative Valuation

(Source: Analysis by Kalkine Group)

Stock Recommendation:

OPRX's share price has fallen 33.62% in the past three months and is currently leaning towards the 52-week low of USD 37.85. We have valued the stock using the price/earnings multiple based relative valuation methodology and arrived at a target price of USD 39.88. Considering the long cash conversion cycle, overvalued multiples, weak margins, current valuation, and other technical indicators, we recommend a "SELL" rating on the stock at the current price of USD 48.87, up 0.49% as of February 16, 2022, at 11:56 AM ET.

OPRX's 3-Year Technical Price Chart. (Source: REFINITIV, Analysis by Kalkine Group)

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.