Cathie Wood is always making moves. The CEO, co-founder, and rock-star stock picker for the Ark Investment family of exchange-traded funds (ETFs) publishes her transactions at the end of every trading day. What's she buying these days?
The growth-stock investor added to her stakes in UiPath (PATH 3.89%), Prime Medicine (PRME 3.14%), and Adaptive Biotechnologies (ADPT 4.78%) on Thursday. What does Wood see in these three somewhat off-the-radar companies? Let's take a closer look.
UiPath
Shares of UiPath tumbled 11% on Thursday, despite posting seemingly strong quarterly results. Revenue rose a better-than-expected 18% for the fiscal quarter that ended in April, well ahead of the 11% gain that analysts were targeting. The provider of robotics and automation software solutions also trounced profit estimates, something that it has consistently done over the past year.
UiPath also boosted its full-year guidance. It's a beat-and-raise performance in the classic sense, but the market still wasn't impressed. The stock is now down 84% from its peak set shortly after hitting the market at $56 two years ago.
Why is the market reacting unfavorably to a report that appears so strong at first glance? Let's start with the raised guidance. UiPath beat revenue projections in the fiscal first quarter by more than the full-year raise. In other words, it's actually lowering its outlook for the final nine months of fiscal 2024.
Image source: Getty Images.
New guidance for the current quarter isn't great. The $279 million to $284 million that UiPath is eyeing for the fiscal second quarter is a deceleration to between 15% and 17% growth. UiPath's dollar-based net retention rate also clocked in at 122% in the first quarter, a sequential dip from 123% and a lot lower than the 138% it was reporting a year earlier.
Analysts at Barclays and BMO Capital would go on to lower their price targets following the report, but it was a dinner bell for Wood. She added to her UiPath position in all six of the Ark Invest ETFs.
Prime Medicine
Contrary to your initial instinct, Prime Medicine isn't the pharmaceuticals-delivering arm of the world's largest online retailer. Prime Medicine is an early-stage biotech looking to tackle genetic therapies. It's a pre-revenue company, as in it's not generating anything on the top line, and the red ink is substantial. It currently has a market cap of $1.2 billion, making it one of the smaller investments on Wood's radar.
Gene editing is a popular theme for Wood, and this is a swing for the fences. Prime Medicine claims that its editing technology is capable of repairing 90% of known disease-causing mutations. Wood is early here, in more ways than one. The stock just began trading in October, and seven months later it's a broken IPO.
Red ink isn't a good look, but Prime Medicine is still flush with cash. It reiterated earlier this month that it has sufficient liquidity to cover its operating expenses and capital expenditures into 2025.
Adaptive Biotechnologies
Prime Medicine wasn't the only gene-editing play on Wood's shopping list on Thursday. Ark Invest also added to its stake in Adaptive Biotechnologies, a small biotech stock focusing on immune-system genetic sequencing technology.
Adaptive is another broken IPO, shedding roughly two-thirds of its value since going public in 2019. Unlike Prime Medicine, Adaptive has years of generating revenue, and until recently it was growing at a heady clip. It saw its top line decline 3% in its latest quarter.
It's not all bad news. The company announced earlier this month that the Food and Drug Administration accepted an investigational new oncology drug application submitted by its collaborator.
Wood's bets on Prime Medicine and Adaptive Biotechnologies will take time to play out, but the upside is high on both fronts if they succeed.
