ARK investment services founder Cathie Wood is one of the most popular institutional investors. Wood gained popularity after her strategic investments generated big gains last year. Her Ark Innovation ETF (ARKK) is focused on the long-term growth of capital, investing at least 65% of its assets in domestic and foreign equity securities.
Wood expects these companies have the potential for ‘disruptive innovation.’ The ETF has gained 86.4% over the past year.
ARKK holds a substantial stake in Zillow Group, Inc. (Z) and Fate Therapeutics, Inc. (FATE). As of September 9, ARKK held 6,470,458 shares of Z, representing 2.8% of ARKK’s portfolio, while FATE represented nearly 2% of the portfolio. These two stocks are among ARKK’s top 20 holdings. And, given their sound fundamentals and disruptive growth prospects, Wall Street analysts expect them to rally by 40% in price soon.
Zillow Group, Inc. (Z)
Seattle, Wash.-based Z is a digital real estate company that operates real estate brands on mobile applications and websites in the United States. It operates through three segments: Homes; Internet, Media & Technology; and Mortgages.
On June 15, Z launched significant upgrades to its Zestimate® home valuation model. The changes allow the algorithm to react more quickly to current market trends, providing homeowners with a more accurate estimate of a home’s current value. “The new architecture we’re debuting today represents another significant step forward in our efforts to harness big data to create more certainty for consumers, which leads to better decisions,” said Dr. Stan Humphries, Zillow’s chief analytics officer and creator of the Zestimate.
Z’s total revenues increased 70% year-over-year to $1.31 billion in its fiscal second quarter, ended June 30. Its gross profit grew 91.7% from its year-ago value to $538.40 million, while its total adjusted EBITDA improved 1,053.9% year-over-year to $182.77 million. In addition, the company’s net income increased 111.4% year-over-year to $9.64 million.
Analysts expect Z’s revenues to increase 97.3% year-over-year to $6.59 billion in the current year. A $1.17consensus EPS estimate for the current year indicates a 165.90% rise versus the last year. Furthermore, Z surpassed the Street’s EPS estimates in each of the trailing four quarters, which is impressive. Over the past year, Z has gained 17.2% in price to close yesterday’s trading session at $94.49.
The $139.00, 12-month median price target indicates a potential 47.6% upside from its last closing price. The price targets range from a low of $125.00 to a high of $153.00.
Fate Therapeutics, Inc. (FATE)
FATE is a clinical-stage biopharmaceutical company, developing programmed cellular immunotherapies for cancer and immune disorders worldwide. It is headquartered in San Diego, Calif.
On August 19, FATE highlighted positive interim clinical data from FT516 and FT596 programs for patients with relapsed/refractory B-cell lymphoma. If approved, these product candidates are likely to garner significant returns for the company soon.
Also last month, FATE announced the treatment of the first patient with FT819, an off-the-shelf chimeric antigen receptor (CAR) T-cell therapy targeting CD19+ malignancies. This is the first-ever CAR T-cell therapy derived from a clonal master-induced pluripotent stem cell (iPSC) line and marks a landmark achievement in its therapeutic developments.
For the six months ended June 30, FATE’s collaboration revenue increased 207.7% year-over-year to $24.55 million. In addition, net cash provided by financing activities rose 59.5% from the same period last year to $441.77 million over this period.
A $42.29 million consensus revenue estimate for the current year indicates a 34.5% increase year-over-year. FATE has gained 128.6% in price over the past year to close yesterday’s trading session at $69.52. The stock has gained 3.8% intraday.
Of the 11 Wall Street analysts that rated FATE, seven rated it Buy, while four rated it Hold. The 12-month median price target of $103.89 indicates a potential 43.7% upside. The price targets range from a low of $77.00 to a high of $135.00.
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Z shares were trading at $93.60 per share on Thursday afternoon, down $0.89 (-0.94%). Year-to-date, Z has declined -27.89%, versus a 21.00% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics. More...
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