There is some good news and bad news for fans of Cathie Wood. The good news for the co-founder CEO of the Ark Invest family of exchange-traded funds (ETFs) is that her largest fund -- with more than $9 billion in assets -- is rolling in 2023. It's up 40% so far this year, more than doubling the market's healthy return. After sliding badly in 2021 and 2022, Wood is back on top.
The bad news is that she's not all the way back on top. The ETF is still 73% below its all-time high set in early 2021. It's also retreated 15% from its recent summertime high.
She's making moves to get back on top. What's she buying? Wood added to her existing stakes in Palantir Technologies(NYSE: PLTR), Intellia Therapeutics(NASDAQ: NTLA), and Accolade(NASDAQ: ACCD) on Thursday. Let's take a closer look.
1. Palantir Technologies
Shares of Palantir took an 8% hit on Thursday, and we know that Wood doesn't shy away from some of her favorite stocks when they take a hit. It's often a buying opportunity.
The software builder for the intelligence community was on the receiving end of a problematic analyst downgrade on Thursday. Morgan Stanley lowered its rating from equal weight to underweight, concerned that the stock's surge this year is being fueled by artificial intelligence (AI) hype that may be overly optimistic.
Palantir stock has more than doubled in 2023, up 133% even after Thursday's retreat. Morgan Stanley is bumping its price target up from $8 to $9, but the shares would have to plunge 40% to get to the fresh price goal. Palantir is now profitable, but revenue growth is decelerating for the third consecutive year.
Palantir has succeeded in growing its customer base beyond its initial core of federal agencies as well as state and local governments. Its platform is proving appealing to private businesses, particularly in the financial and healthcare markets. There are worse things than growing revenue at a 13% clip in this operating climate, but it's going to have to step on the accelerator if it wants to keep building on this year's strong gains.
2. Intellia Therapeutics
Wood has a penchant for disruptive growth stocks, and it doesn't have to be mainstream tech plays. Intellia Therapeutics is a gene-editing stock, and it's so small that Wood already owns nearly 10% of its outstanding shares. It's a big bet on a stock with a modest $3.3 billion market cap. With a strong net-cash position on its balance sheet, Intellia's enterprise value drops down to $2.4 billion. If Wood decides to move on from Intellia it won't be easy to clear out of its significant stake without moving the stock.
Patience is the play here. Intellia is still in early clinical-phase trials for a couple of promising gene-editing therapies. It will take time for one or both plays to pay off, and that's where the strong cash position helps. Analysts don't see Intellia turning a profit until 2027, and by then they're modeling revenue to climb 15-fold from where it is now.
Finally we have Wood buying more Accolade. The healthcare benefits specialist is moving up. It posted a loss on a mere 9% increase in revenue in its latest quarter, but that was better than expected on both ends of its income statement. It also boosted its guidance, giving it a classic "beat and raise" performance this summer.
At least six analysts would go on to jack up their price targets on Accolade following the report at the end of June. Wall Street is encouraged by strong demand for Accolade's offerings and its encouraging pipeline as it navigates its way to eventual profitability. The market sees revenue growth accelerating for the balance of this fiscal year as well as next year. The stock has soared 73% in 2023, but Wood naturally thinks Accolade is just starting to earn its accolades.
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