Cathie Wood has long championed innovation, often sparking intrigue – and sometimes skepticism – with her bold predictions, including a forecast that Bitcoin could eventually reach a value of up to $3.8 million.
The ARK Invest CEO has also set a lofty price target for Tesla (NASDAQ:TSLA), projecting that its shares could soar to $2,600 by the end of the decade. While undeniably bullish, Wood may currently view Tesla’s recent gains as an opportunity to ‘sell the news.’ Following a strong surge in the stock on the back of a surprisingly strong Q3 report, Wood has been offloading TSLA shares.
Meanwhile, Wood has been getting the checkbook out this month for a lesser-known name, loading up on shares of Crispr Therapeutics (NASDAQ:CRSP), a biotech firm, and the kind of stock right up Wood’s innovation-focused alley.
So, we’ve decided to take a closer look at the pair and find out what’s behind these moves. With some help from the TipRanks database, we can also find out whether this sort of activity makes sense to the Street’s analyst community. Let’s check the details.
Tesla
Tesla shares have delivered some huge gains for investors over the past 10 years but even by its own standards, Thursday’s surge was unusual. The stock notched its biggest one-day gain in more than a decade, climbing 22% after the company delivered a third-quarter readout that surprised Wall Street.
It was no conclusive beat-and-raise, however. The company actually missed on the top line, as revenue of $25 billion fell short of analyst expectations by $490 million. Primarily, investors were impressed with a big beat on auto margins, which came in at 17.05%, handily beating the forecast of 14.5%. Tesla’s margins have been under pressure for a while as the company has been reducing prices to stimulate demand, but the quarter provided benefits in the shape of lower raw material costs and the launch of an FSD (full self-driving) feature.
Investors were also reacting positively to Elon Musk’s comments about what will be coming next year, when Tesla’s autonomous driving plans could be reaching new milestones. Musk said robotaxis could be operating in Texas and California in 2025 while cheaper models also feature in the plans for next year.
Whether all that actually takes place remains to be seen as Musk has a free and easy approach to timetables. Nonetheless, Cathie Wood appeared to see Thursday’s surge as a prime opportunity to cash in. Wood’s ARKK and ARKQ funds sold 85,456 TSLA shares, netting $22.22 million.
One analyst who definitely thinks investors should stay away here is Bernstein’s Toni Sacconaghi. The TSLA bear points out various reasons to be wary following the Q3 report.
“While margins for Tesla’s auto business appear to have stabilized, we expect Teslas’s revenues to grow only 2% this year, and in the teens next year, and yet the stock trades at 70 – 80x our FY 25 estimates,” he explained. “We believe that TSLA’s automotive business is likely worth ~$200B (or ~$70/share), suggesting that the company’s valuation embeds ~$500B+ in value from other businesses, likely full self-driving/Robotaxi and a humanoid robot, which we struggle to underwrite given our doubts that Tesla can outright win in self-driving and the fact that Uber’s market cap is ~ $150B.”
These comments underpin Sacconaghi’s Underperform (i.e., Sell) rating while his $120 price target implies the shares will slide by a big 55% over the coming year. (To watch Sacconaghi’s track record, click here)
The Street’s average price target is higher than that, but at $207.83, it still factors in a ~23% decline from current levels. While most aren’t as bearish as Sacconaghi, the majority remain on the sidelines for now; the stock’s Hold consensus rating is based on a mix of 16 Holds, 11 Buys and 8 Sells. (See Tesla stock forecast)
CRISPR Therapeutics
From one innovator to another far less heralded one. CRISPR Therapeutics, with a market cap of just under $4 billion, is a biotech company that develops gene-editing treatments based on groundbreaking CRISPR/Cas9 technology. This tech allows scientists to make precise changes to DNA, which could treat or even cure certain genetic diseases at their source. The company uses CRISPR to develop therapies for a range of serious conditions, including blood disorders like sickle cell disease and beta-thalassemia, as well as various cancers and other rare genetic diseases.
Since being founded in 2013, the company has collaborated with several major pharma companies, including Bayer and Vertex Pharmaceuticals. In fact, its collaboration with the latter has resulted in the first-ever approved CRISPR-based therapy, Casgevy, which has been given the go-ahead to treat sickle cell disease (SCD) and transfusion-dependent beta thalassemia (TDT) in patients 12 years and older.
Beyond Casgevy, the company is advancing other candidates, including CTX112, aimed at treating CD19+ malignancies and autoimmune disorders, and CTX131, which targets a range of solid tumors and hematologic cancers.
Wood obviously likes the work being done here. During October, via her ARKK & ARKG funds, she bought 271,488 CRSP shares. These are currently worth more than $13 million.
This pioneering biotech firm also has a fan in Truist analyst Joon Lee, who thinks an eventful upcoming period could be fruitful for investors.
“Next 12-18 months will be catalyst rich for CRSP with data updates from CTX112 & CTX131 in I&I (Immunology and inflammation) and IO (immuno-oncology),” said Lee, who ranks in the top 2% of Wall Street stock pros. “For CTX112 data update in B-cell cancers at ASH24/YE24, we will be looking for improved efficacy relative to CTX110, with read-throughs to ongoing trial in SLE (systemic lupus erythematosus) and I&I, where investor focus seems to be gravitating towards. CTX131 in solid tumor, which carries similar new edits as CTX112, should also have read-throughs. Allogeneic drugs offer key advantages over autologous drugs, and we are incrementally constructive heading into ASH 2024 and 2025.”
Lee backs his enthusiasm with a Buy rating on CRISPR shares, supported by a $100 price target – a potential 106% upside from current levels. (To watch Lee’s track record, click here)
So, that’s Truist’s view. Let’s have a look at what the rest of the Street has in mind for CRSP shares. Based on 10 Buys, 6 Holds and 2 Sells, the analyst consensus rates RCL a Moderate Buy. The average price target stands at $71.56, offering 12-month returns of ~48%. (See CRSP stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
