OpGen, Inc. (OPGN) in Rockville, Md., is a precision medicine company that is developing molecular microbiology solutions. Its product pipeline is designed to treat various types of infectious diseases. OPGN’s major products include Acuitas AMR Gene Panel, QuickFISH, PNA FISH diagnostic test products, and SARS CoV-2 test kits.
Shares of OPGN have slumped 74.6% in price over the past year and 27.8% year-to-date to close yesterday’s trading session at $0.78.
The company’s disappointing financials and extended market weakness have caused OPGN’s share to lose momentum over these periods.
Click here to checkout our Healthcare Sector Report for 2022
Here is what could shape OPGN’s performance in the near term:
Negative Profit Margins
OPGN’s trailing-12-month gross profit stood at $8.81 million, translating to a negative 208.16% gross profit margin. In addition, the company’s trailing-12-month net income margin stands at negative 829.79%, while its EBITDA margin is negative 485.11%.
Furthermore, OPGN’s trailing-12-month ROE, ROA, and ROTC margins are negative 139.36%, 56.36%, and 30.20%, respectively. And the company’s 0.08% trailing-12-month asset turnover ratio is 76.9% lower than the 0.34% industry average.
Poor Cash Flows
OPGN’s poor cash flows have raised concerns regarding its ability to meet its debt and interest payment liabilities. The company’s total debt stands at $24.79 million. However, its trailing-12-month net operating cash outflow came in at $24.63 million, while its levered free cash outflow amounted to $17.92 million. OPGN’s debt/free cash flow ratio is negative 1.62.
The company has a total cash balance of $25.35 million. However, given its relatively low revenues and negative profit margins, the company’s existing cash balance is expected to finance its working capital and general corporate expenses.
Stock Issuance
On Dec. 9, 2021, OPGN proposed an expansion of its authorized number of shares of common stock from 50 million to 100 million. Approximately 79.8% of existing shareholders (with voting rights) voted in favor of this proposal.
This follows a registered direct offering of 150,000 shares of convertible preferred stock and warrants to a healthcare-focused institutional investor last October. The company raised $15 million in gross proceeds from the offering. As a result of increasing its authorized shares of common stock, OPGN’s EPS and ROE are expected to decline.
POWR Ratings Reflect Bleak Prospects
OPGN has an overall D rating, which equates to Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
OPGN has a grade of D for Stability, Momentum, and Quality. The stock’s negative 0.79 beta justifies the Stability grade. In addition, OPGN is currently trading below its 50-day and 200-day moving averages of $0.88 and $1.84, respectively, indicating a death-cross downtrend, in sync with the Momentum grade. And the company’s negative profit margins justify the Quality grade.
Of the 53 stocks in the D-rated Medical – Diagnostics/Research industry, OPGN is ranked #36.
Beyond what I have stated above, view OPGN ratings for Growth, Value, and Sentiment here.
Bottom Line
Analysts expect OPGN’s revenues to decline 2% year-over-year to $4.13 million in its fiscal year 2021 (ended December). In addition, the Street expects the company’s EPS to remain negative until at least this year. Given its poor growth prospects, OPGN is best avoided now.
How Does OpGen (OPGN) Stack Up Against its Peers?
While OPGN has a D rating in our proprietary rating system, one might want to consider looking at its industry peers, Qiagen N.V. (QGEN), Global Cord Blood Corporation (CO), and Agilent Technologies Inc. (A), which have an A (Strong Buy) rating.
Click here to checkout our Healthcare Sector Report for 2022
OPGN shares were trading at $0.80 per share on Tuesday morning, up $0.02 (+2.56%). Year-to-date, OPGN has declined -20.00%, versus a -5.49% rise in the benchmark S&P 500 index during the same period.
About the Author: Aditi Ganguly
Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities.
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