Cathie Wood's ARK Innovation ETF isn't afraid to go against Wall Street and the S&P 500. But in some cases, the consensus agrees with the famed ETF manager.
Analysts think eight stocks in ARK Innovation, including Verve Therapeutics, 2U and Intellia Therapeutics, will jump 50% or more in the next 12 months, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
That's a major endorsement. Analysts as a group are nowhere near that bullish on the S&P 500. Even the most optimistic major Wall Street strategists are calling for the S&P 500 to rise about 9% this year.
So to see analysts as bullish on Wood on some stocks — mostly in health care — should tell you something.
Keeping Up With The Wood
It's easy to understand why investors are so fixated on Wood's ARK Innovation. It really takes off in a good market.
Just look at 2023. The ETF ended the year with a 67.64% total return, making it the No. 1 actively traded U.S. diversified ETF. It even topped the 55.0% return of the Invesco Nasdaq 100 ETF. The SPDR S&P 500 ETF Trust returned just 26.2%.
And if 2024 is another good (but not great) year for the S&P 500, all eyes are on the high-octane kinds of stocks Wood prefers.
Overall, analysts like most of Wood's picks in the 34-stock ARK Innovation portfolio. They think these stocks will gain nearly 30% on average in 12 months. And analysts also see upside in all but 40% of the stocks in 12 months.
Feel The Verve
Wall Street seems to like Wood's taste in speculative health care stocks the best, though. Of the eight picks analysts think will rise 50% or more this year, five hail from the health care sector.
In fact, analysts are most bullish on a health care stock ARK Innovation has a fairly small 0.5% weighting in: Verve Therapeutics.
The company is working on gene editing medicines primarily for treating heart disease and liver conditions. Analysts think the stock will trade for 45.89 a share in 12 months. If they're right, that would translate into a 229% gain from current levels.
Investors could use some good news. Verve's stock fell 28% in 2023. And Verve remains a highly speculative company. Analysts also think it will lose money every year until at least 2027. Verve is seen losing $3.26 a share in 2023.
Intellia Therapeutics is another Wood pick analysts like — also a gene-editing treatment company. Analysts think the stock will jump more than 150% this year. Nevermind it too is seen losing money annually since 2027, including $5.38 a share in 2023. It's a larger position than Verve in the ARK Innovation portfolio at 2.8%, but still not a giant bet.
Following Wood Out Of Health Care
Analysts also expect great things this year from 2U. The online education company is just a 0.09% position in ARK Innovation's portfolio following its 80% drop last year. And yet, analysts think the stock will rise 178% in 12 months.
Once again, it's not a stock for the faint of heart. 2U is expected to make 22 cents a share in 2023, but dip back into the red in 2024.
But if Wood's investing style teaches you anything, it's to go for the big winners and ride them.
Analysts' Favorite ARK Innovation Holdings
Implied upside to 12-month price targets
| Company | Ticker | Upside | Sector |
|---|---|---|---|
| Verve Therapeutics | 229.2% | Health Care | |
| 2U | 178.0% | Consumer Discretionary | |
| Intellia Therapeutics | 150.4% | Health Care | |
| Invitae | 109.0% | Health Care | |
| Ginkgo Bioworks Holdings | 103.6% | Materials | |
| Cerus | 91.0% | Health Care | |
| Beam Therapeutics | 74.9% | Health Care | |
| Archer Aviation | 52.4% | Industrials |
