Natera is Thursday's pick for IBD 50 Stocks To Watch as the biotech reclaims a critical chart level and serves up a fresh buy point. The DNA testing company is a holding of Cathie Wood's ARK Invest fund.
Natera specializes in noninvasive genetic testing technology. Its main focuses are women's health, including preconception and prenatal genetic testing, cancer and organ health. It also offers DNA testing for kidney, heart and lung transplants.
The biotech stock hold the No. 2 spot out of 41 in the Medical-Research Equipment/Services industry group. The group is ranked No. 154 out of 197 IBD industry groups.
Cathie Wood Biotech Stock Climbs
Wood's biotech-focused ARK Genomic Revolution ETF owned 367,220 shares, or 3.57% of its holdings, as of Thursday. The fund has underperformed this year, but is widely followed.
Natera stock is extended from the buy zone of a skewed irregular base with a 117.43 buy point, according to its MarketSurge weekly chart.
Shares are trending sideways in lighter-than-average volume and may be forming a flat base.
But the stock reclaimed its 10-week moving average, which offers an aggressive entry at 124.40. Natera stock is within 3% of its 52-week high. Its relative strength line is leveling out after a steep climb from last November through August.
Its 96 IBD Relative Strength Rating shows it outperformed 96% of the stocks IBD tracks over the last 12 months. Shares have climbed around 106% so far this year.
Natera's Losses Shrinking
Natera is not profitable but its losses are shrinking. It reported a $5.57 per-share loss in 2022 followed by a $3.78 per-share loss in 2023. Projections call for a $1.98 loss in 2024, then dwindling to $1.16 in 2025.
The biotech on Aug. 8 reported a smaller-than-expected loss and higher sales than analysts projected. 8. It also gave a full-year revenue forecast above estimates.
Its Q2 sales growth accelerated to 58% from 27% four quarters ago. Forecasts show slowing revenue growth, with a 35% rise in Q3 then trailing off to single digits over the next four quarters.
The company reports its third-quarter results Tuesday after the market close.
Natera holds an Accumulation/Distribution Rating of A-, indicating heavy institutional buying over the last 13 weeks.
Cathie Wood isn't alone in owning Natera. A significant 83% of Natera shares are owned by mutual funds, while management owns 6%. Seven high-performing IBD Mutual Fund Index names own Natera, including Lord Abbett Developing Growth Fund (LAGWX) and Allspring Growth Fund (SGRAX).
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