Cathie Wood is offloading her preferred equity. should you follow suit?
Rewritten Article:
Cathie Wood, Wall Street's legendary investor, is no stranger to controversy as she manages her ARK ETFs in the brand-new year of 2023. Recently, she dumped her favorite stock. Here's the lowdown on the reasons behind it.
Cathie Wood is a force to be reckoned with on Wall Street. While some adore her, others can't say a kind word about her. With her investment company Ark Invest, she oversees several actively managed ETFs, focusing mainly on innovation, technology, and growth. During the tech boom's heyday, she generated returns that made the stock market seem ordinary. With her Ark Innovation Fund, her prime product, she raked in over 300 percent returns between 2021 and 2020.
However, since the markets have nosedived, and especially growth stocks have been given a thrashing due to soaring interest rates, the Ark Innovation ETF is about 75 percent below its February 2021 high. Wood, nevertheless, continually emphasizes that her strategy is long-term and she chases an investment horizon of five years.
A Favorite Stock Sold Off: Exact Sciences
The New Year has brought Cathie Wood and her Ark Innovation ETF a 20% boost - and interest in her stock picks has never been stronger. So it caught everyone's attention when Wood unloaded a substantial chunk of her favorite stock on January 23 and 24. As of now, Exact Sciences holds the largest position in the Ark Innovation ETF, a medical diagnostics company renowned for its at-home colon cancer tests. Within two days, she offloaded nearly 276,000 shares of Exact Sciences.
Was this move due to the stock's performance last year? After all, it lost about 25% of its value in 2022. Probably not, because since October, the stock has made a remarkable comeback of 116%, primarily due to the overall market recovery and the company's announcement in January that its fourth-quarter revenue numbers could surpass expectations, and that it might finally post a positive adjusted EBITDA for the fourth quarter and the full year. Wood likely liquidated her profits from the gains she made in this short stint. In the Ark Innovation ETF, Exact Sciences still accounts for over 8% and remains the top position. Investors intrigued by Wood's market instincts might also consider buying the stock of this promising healthcare company. It still offers around 23% upside potential with a price target of $74.
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Advancements in Exact Sciences:
Exact Sciences Corporation has been aggressively innovation-driven, developing new products and expanding its existing portfolio, especially in the realm of cancer screening technologies. Some of their key advancements include:
- Launch of Cologuard Plus: Exact Sciences has introduced Cologuard Plus, an FDA-approved, non-invasive colorectal cancer screening test with high accuracy, with Medicare coverage. This test intends to reduce the need for follow-up colonoscopies by 40%. The launch has positively contributed to investor confidence and stock performance.
- Oncotype DX Breast Recurrence Score: The company has published a study in JAMA Oncology, demonstrating that the Oncotype DX test is reliable across all racial and ethnic groups. This makes it a crucial component of treatment planning.
- Revenue and Financial Performance: Exact Sciences reported a revenue of approximately $2.75 billion in 2024, representing a 10% increase from the previous year. Despite the growth, the company's guidance for the first quarter of 2025 was lowered due to seasonal trends.
Future Prospects:
- Product Pipeline: Exact Sciences is poised for growth as it prepares to introduce new tests such as the Oncodetect Molecular Residual Disease Test and the Cancerguard Multi-Cancer Early Detection Test in 2025. These launches could bolster the company's market position.
- Analyst Views: Analysts generally have a positive outlook for Exact Sciences, with many firms maintaining Buy ratings. Their price targets vary, with some analysts setting targets as high as $86, attributing potential sales and EBITDA growth to new product launches.
- Stock Performance: Although Cathie Wood's share sales may have temporarily impacted investor sentiment, Exact Sciences' stock has shown resilience, often rebounding after promising updates. However, its performance is currently influenced by market-wide challenges, and it has touched a 52-week low.
- Cathie Wood, known for her ARK ETFs focused on innovation and growth, sold off a substantial amount of Exact Sciences, her favorite stock, on January 23 and 24, 2023.
- Despite selling Exact Sciences shares, the company still holds the largest position in the Ark Innovation ETF, representing over 8% of its total assets.
- Exact Sciences, a medical diagnostics company, has reported a revenue of approximately $2.75 billion in 2024, marking a 10% increase from the previous year.
- Investors intrigued by Cathie Wood's market instincts and the upside potential of 23% for Exact Sciences might consider buying shares of this healthcare company.
