Cathie Wood, the founder of investment management firm Ark Invest, is one of today’s most influential investors. Wood’s popularity was primarily tied to her portfolio’s impressive gains last year. Her flagship fund gained more than 150% in 2020.
The renowned investor believes that investing in innovation is the key to success. Her funds invest in companies with the potential for ‘disruptive innovation’ or those that can be the beneficiaries of disruptive innovation.
Wall Street analysts expect Wood’s holdings Coinbase Global, Inc. (COIN), Roku, Inc. (ROKU), and Teladoc Health, Inc. (TDOC) to rally by more than 40% in the near term. These stocks are among the top five stocks in the ARK Innovation ETF (ARKK) portfolio.
Coinbase Global, Inc. (COIN)
COIN provides financial infrastructure and technology for the crypto economy. It offers the primary financial account in the crypto economy for retail users. The company went public through the traditional IPO process on April 14, 2021.
COIN currently ranks fourth in the ARKK ETF with a 5.6% weightage. As of September 28, ARKK held 1,841,99 shares of the company.
On September 14, COIN declared the pricing of its Senior Notes due in 2028 and 2031, both with an aggregate principal amount of $1.0 billion each. The offerings are expected to bolster the company’s balance sheet performance, and the proceeds are expected to be used for investments in products or services, or acquisitions.
In the fiscal second quarter ended June 30, COIN’s total revenue increased 1,095.4% year-over-year to $2.23 billion. Net income came in at $1.61 billion, up 4,879.4% from the same period last year. Net income per share attributable to common stockholders stood at $6.42 for the period.
Street revenue estimate of $6.99 billion for the current year (fiscal 2021) indicates a 447.2% year-over-year rise. The stock has gained 6.4% over the past three months to close yesterday’s trading session at $250.38.
Out of the 16 Wall Street analysts that rated COIN, 12 have rated it Buy while three have rated it Hold and one has rated it Sell. The 12-month median price target of $351.50 indicates a 40.4% upside potential. The price targets range from a low of $220 to a high of $500.
Roku, Inc. (ROKU)
ROKU works as an online TV streaming platform in several countries. The company operates in two segments – Platform and Player. Its offerings include the Roku Platform, the Roku Channel, and Roku streaming devices.
ROKU currently ranks third in the ARKK ETF with a 5.8% weightage in the portfolio. As of September 28, ARKK invested in 95,295 shares of the company.
On September 30, ROKU partnered with Brazilian electronics company SEMP TCL to bringing ROKU TV models to Brazil. With this strategic partnership, the company expects to reach out to a larger customer base and emerge as a leader in the streaming platform services market in the country.
On September 27, the company launched its streaming player line-up in Germany for German consumers to enjoy its local and global entertainment media. This introduction should strengthen ROKU’s foothold in Germany and in the global streaming market.
For the second fiscal quarter ended June 30, ROKU’s total net revenue increased 81.2% year-over-year to $645.12 million while total gross profit improved 130.4% from the prior-year quarter to $338.27 million. Net income and net income per share came in at $73.47 million and $0.52, up substantially from their negative year-ago values, respectively.
The consensus EPS estimate for the current year (fiscal 2021) of $1.27 indicates a 1,007.1% year-over-year increase. Likewise, the consensus revenue estimate of $2.83 billion for the ongoing year reflects an improvement of 59.4% from the prior year. Moreover, ROKU has an impressive surprise earnings history as it has topped consensus EPS estimates in each of the trailing four quarters. ROKU’s stock has gained 57.1% over the past year and 5.7% intraday to close yesterday’s trading session at $321.69.
Of the 17 Wall Street analysts that have rated ROKU, 14 rated it Buy while two rated it Hold and one rated it Sell. The 12-month median price target of $475.00 indicates a 47.7% upside potential. The price targets range from a low of $310 to a high of $650.
Teladoc Health, Inc. (TDOC)
TDOC is a virtual healthcare service provider in the United States and globally. The company offers technology and expertise for whole-person virtual care, covering various clinical conditions.
TDOC currently ranks second in the ARKK ETF with a weight of 5.8%. As of October 5, ARKK held 1,541,75 shares of the company.
On October 6, TDOC made primary care service, Primary360 available to commercial health plans and employers or organizations that sponsor healthcare services. About this service availability, Donna Boyer, Chief Product Officer at Teladoc Health, said, “Primary360 has the unique power to drive the unified health care experience that consumers are demanding by removing longstanding barriers like access, cost and convenience.”
On September 28, TDOC announced that it had been designated as a pre-qualified vendor by Canada Health Infoway (Infoway) to provide remote patient monitoring solutions across provinces and territories, serving approximately 60% of Canada’s population. This demonstrates the company’s expanding market reach.
TDOC partnered with Microsoft Corp. (MSFT) to strengthen physician and patient access to best-in-class virtual healthcare in July. The strategic collaboration is expected to enable the company to enhance the quality of its virtual services.
TDOC’s revenue increased 108.7% year-over-year to $503.14 million in the fiscal second quarter ended June 30. Adjusted gross profit rose 128.2% from the prior-year quarter to $342.87 million. Adjusted EBITDA improved 154.2% from the same period last year to $66.78 million.
Analysts expect TDOC’s EPS to increase 77.5% year-over-year in the ongoing quarter (ending December 2021). Likewise, Street revenue estimate of 540.06 million for the current quarter reflects a rise of 40.9% from the prior-year quarter. The stock has gained 1.6% intra-day to close yesterday’s trading session at $126.31.
Out of the 21 analysts that rated TDOC, 13 have rated it Buy, and eight have rated it Hold. The 12-month median price target of $203.20 reflects a 60.9% upside potential. The price targets range from a low of $142.00 to a high of $291.00.
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COIN shares fell $0.69 (-0.27%) in after-hours trading Thursday. Year-to-date, COIN has declined -23.36%, versus a 18.47% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...
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