10 Best Pharmaceutical Stocks to Buy According to Cathie Wood
In this article we discuss the 10 best pharmaceutical stocks to buy according to Cathie Wood. If you want to skip our detailed analysis of Cathie Wood's history, investment philosophy, and hedge fund performance, go directly to the 5 Best Pharmaceutical Stocks to Buy According to Cathie Wood.
Catherine Duddy Wood is the founder, CEO, and Chief Investment Officer of ARK Investment Management. Cathie Wood was the winner of the Bloomberg News’ best stock picker award of 2020. She manages the largest actively traded ETF that focuses on disruptive technologies in the world.
In March 2021, Wood had two of her funds listed in the top ten largest funds managed by women. Since setting up ARK Investment Management, Wood has reported impressive returns, mainly due to her strategy of targeting companies with innovative and futuristic products. However, 2021 has been a difficult year for Wood amid a slump in tech stocks.
She mainly invests in companies with products that have a huge growth potential in the long term, including genomics, battery tech, space research, biotech and EVs. She is known to be one of Tesla, Inc. (NASDAQ: TSLA)'s biggest bulls in the market. According to Wood, Tesla will one day be valued at more than $1 trillion. The stock of Tesla, Inc. (NASDAQ: TSLA) has generated 248% over the past year.
Before launching ARK in 2014, Wood worked at two mutual fund firms. Her flagship portfolio at ARK was valued at $8.6 billion and reported an average annual return of 40% over the last five years.
One of the recent shuffles made by Wood in her portfolio is Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM). ARK cut its stake in the company by 91% to 397,524 shares. The company's April revenue surged 16% YoY, while it decreased 13.8% MoM to NT$111.315 billion. Back in April, Ianjit Bhatti, an analyst at Atlantic Equities, rated the stock of Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) as “Neutral.”
ARK Investment also trimmed its stake in Apple Inc. (NASDAQ: AAPL) by 35% to 594,039 shares. In a recent news, Apple and Alphabet Inc. (NASDAQ: GOOGL) tied up with Coinbase. Users will now be able to add cards on Google Pay and Apple Pay from their accounts. On May 28, Pierre Ferragu, an analyst at New Street Research, downgraded Apple Inc. (NASDAQ: AAPL) stock to “Sell” from “Neutral,” and set a price target of $90.
On the contrary ARK upped its stake in Alibaba Group Holding Limited (NYSE: BABA) by approximately 9.9% to 590,826 shares. Around 250,000 brands have joined the company's e-commerce platform just before the 6.18 shopping festival. For FY 2021, Alibaba Group Holding Limited (NYSE: BABA) revenue increased 41% YoY to RMB717,289 million. The company expects RMB930 billion in revenue in FY 2022.
Cathie Wood of ARK Investment Management
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With this context in mind, here is our list of the 10 best pharmaceutical stocks to buy according to Cathie Wood.
Best Pharmaceutical Stocks to Buy According to Cathie Wood
10. Veracyte, Inc. (NASDAQ: VCYT)
Wood’s Stake Value: $409,429,00 Percentage of Cathie Wood’s 13F Portfolio: 0.81% Number of Hedge Fund Holders: 19
Veracyte, Inc. (NASDAQ: VCYT) is a genomic diagnostics company founded in 2006. It is placed tenth on our list of 10 best pharmaceutical stocks to buy, according to Cathie Wood. Veracyte stock has offered 40% in returns to investors over the course of the past twelve months.
The company reported revenue of $36.7 million in Q1 2021, representing an 18% increase YoY. Veracyte reported EPS of $0.66. For FY 2021, the company reiterated its revenue guidance of $190 million to $200 million, representing a growth of 65%. As per a recent study, Decipher Prostate Genomic Classifier of Veracyte can now predict prostate cancer in African-American men. In February, Needham & Company's analyst Stephen Unger initiated a rating on the stock and rated it as "Buy." The firm set a price target of $54. Earlier in January, Truist Securities rated the stock as "Buy," with a price target of $55.
The hedge fund run by Cathie Wood owns more than 7.6 million shares in the genomic diagnostics company, worth over $409 million, representing 0.81% of their portfolio. Out of the hedge funds being tracked by Insider Monkey, Matrix Capital Management is a leading shareholder in Veracyte, Inc. (NASDAQ: VCYT), with 2.97 billion shares worth more than $160 million.
In its Q4 2020 investor letter, Artisan Partners Limited Partnership, an asset management firm, highlighted a few stocks, and Veracyte, Inc. (NASDAQ: VCYT) was one of them. Here is what the fund said:
“Among our top Q4 individual contributors was Veracyte. Veracyte specializes in the improvement of diagnostic accuracy utilizing a combination of RNA sequencing, machine learning and the company’s proprietary “field of injury” technology. Field of injury technology can be applied to diagnosing lung cancer, testing cells in the main airway (since it suffers damage from smoking) instead of requiring a procedure to take a direct sample of the potentially cancerous nodule in the lungs. The company has approval, clinical data and reimbursement for four tests—a big hurdle for a diagnostics company—for thyroid cancer, breast cancer, lung cancer and idiopathic pulmonary fibrosis (a form of lung disease). These diagnostics reduce the number of surgeries performed for patients who have indeterminate test results, saving the health care system unnecessary overtreatment costs. All four tests are expected to launch in 2021, and three of the four received positive news on the reimbursement front, which we believe will help accelerate volumes and revenues for the company. Given the pipeline of diagnostics and a nasal swab for early detection of lung cancer in the pipeline, we believe the company is well-positioned for a meaningful profit cycle ahead.”
9. Intellia Therapeutics, Inc. (NASDAQ: NTLA)
Wood’s Stake Value: $771,404,000 Percentage of Cathie Wood’s 13F Portfolio: 1.53% Number of Hedge Fund Holders: 29
Intellia Therapeutics, Inc. (NASDAQ: NTLA) develops therapeutics utilizing biological tool Clustered. It was founded in 2014 and is ranked ninth on our list of 10 best pharmaceutical stocks to buy, according to Cathie Wood. The company stock has offered investors more than 253% in returns over the course of the past twelve months.
Last month, RBC Capital Markets’ analyst Luca Issi initiated a rating on the stock and rated it as "Outperform." The firm set a price target of $110. Phase 1 study of NTLA-2001 for transthyretin amyloidosis will help boost the company's profits in 2021, as per Issi. Also, Roth Capital's analyst Tony Butler upgraded the stock to "Buy" from "Neutral." Butler also upped the price target to $80 from $75.
ARK investment holds over 9.6 million shares in the company worth over $771 million, representing 1.53% of their portfolio. At the end of the first quarter of 2021, 29 hedge funds in the database of Insider Monkey held stakes worth $1.1 billion in Intellia Therapeutics, Inc. (NASDAQ: NTLA), down from 30 the preceding quarter worth $835.3 million.
8. Ionis Pharmaceuticals, Inc. (NASDAQ: IONS)
Wood’s Stake Value: $231,197,000 Percentage of Cathie Wood’s 13F Portfolio: 0.45% Number of Hedge Fund Holders:23
Ionis Pharmaceuticals, Inc. (NASDAQ: IONS) develops RNA-targeted therapeutics and was founded in 1989. It is placed eight on our list of 10 best pharmaceutical stocks to buy, according to Cathie Wood. The hedge fund chaired by Wood holds close to 5 million shares in the company worth over $231 million. ARK activity on Ionis stock increased by 114% in the past few months.
In May, the stock was upgraded to “Neutral” from “Sell” at UBS, where they raised the price target to $37.54 from $33. While in January, Barclays’ analyst Gena Wang upgraded the stock to "Equalweight” from “Underweight” and set a price target of $47.
Out of the hedge funds being tracked by Insider Monkey, Camber Capital Management is a leading shareholder in Ionis Pharmaceuticals, Inc. (NASDAQ: IONS), with 1 million shares worth more than $44 million. Just like Tesla, Inc. (NASDAQ: TSLA), Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM), Alibaba Group Holding Limited (NYSE: BABA), and Apple Inc. (NASDAQ: AAPL), IONS is one of the best stocks to buy in Cathie Wood's portfolio.
7. Invitae Corporation (NYSE: NVTA)
Wood’s Stake Value: $916,192,000 Percentage of Cathie Wood’s 13F Portfolio: 1.81% Number of Hedge Fund Holders: 34
Invitae Corporation (NYSE: NVTA) is a medical genetics company that uses genetic information in healthcare and was founded in 2010. It is ranked seventh on our list of 10 best pharmaceutical stocks to buy, according to Cathie Wood. The company stock has offered investors more than 62% in returns over the last year.
For Q1 2021, the company posted revenue of $103.6 million, representing a 61.3% increase YoY. During the same period, the gross profit was reported to be $28.1 million; EPS was -$0.56, beating estimates by $0.04. Wells Fargo rated the stock as "Equal Weight," and set a price target of $30.
Just like Tesla, Inc. (NASDAQ: TSLA), Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM), Alibaba Group Holding Limited (NYSE: BABA), and Apple Inc. (NASDAQ: AAPL), NVTA is one of the best stocks to buy in Cathie Wood's portfolio.
ARK Investment holds more than 23.97 million shares in the firm, worth over $916 million. This represents 1.81% of their portfolio. ARK activity on Invitae stock decreased by 12% in the last quarter, latest data reveals. Out of the hedge funds being tracked by Insider Monkey, Baker Bros. Advisors is a leading shareholder in Invitae Corporation (NYSE: NVTA) with 15.75 million shares worth more than $601 million.
6. Fate Therapeutics, Inc. (NASDAQ: FATE)
Wood’s Stake Value: $540,422,000 Percentage of Cathie Wood’s 13F Portfolio: 1.07% Number of Hedge Fund Holders: 39
Fate Therapeutics, Inc. (NASDAQ: FATE) develops cellular immunotherapies for immune disorders and cancer and was founded in 2007. It is placed sixth on our list of 10 best pharmaceutical stocks to buy, according to Cathie Wood. Fate stock has returned more than 129% to investors during the course of the past twelve months.
Last month, the company posted some promising data from iPSC-derived natural killer cell programs in acute myeloid leukemia. For Q1 2021, the company posted revenue of $11.1 million, up 343.02% YoY, beating estimates by $4.44 million. In May, David Nierengarten, an analyst at Wedbush, upgraded the stock to “Outperform” from “Neutral.” He set a price target of $88.
Just like Tesla, Inc. (NASDAQ: TSLA), Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM), Alibaba Group Holding Limited (NYSE: BABA), and Apple Inc. (NASDAQ: AAPL), Fate Therapeutics is one of the best stocks to buy in Cathie Wood's portfolio. At the end of the first quarter of 2021, 39 hedge funds in the database of Insider Monkey held stakes worth $2.6 billion in Fate Therapeutics, Inc. (NASDAQ: FATE), up from 34 the preceding quarter worth $2.5 billion.
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Disclosure: None. 10 Best Pharmaceutical Stocks to Buy According to Cathie Wood is originally published on Insider Monkey.
