In today’s top stories, ARK Invest offloads more Nvidia shares. Meanwhile, analysts see 81% upside in a battery maker stock, 36% upside in Horizon Therapeutics and highlight a rising focus on fundamentals.
Cathie Wood offloads Nvidia
Cathie Wood’s flagship ARK Innovation ETF [ARKK] sold 167,914 shares in Nvidia [NVDA] last week ahead of its Q3 earnings. The fund offloaded 50,252 shares on 20 October. While Nvidia’s share price has gained 17.2% in the past month, it is down 51.8% year-to-date. The company’s gaming revenue could reflect the softening consumer demand that other semiconductor stocks have been reporting.
Horizon Therapeutics has a 36% upside
Flailing investor sentiment has crushed biotech stocks this year, but investors may be turning bullish on Horizon Therapeutics [HZNP] after the company reported Q3 earnings last week. Revenue was down year-over-year, but the company raised its full-year guidance slightly, encouraged by sales. The Horizon Therapeutics share price rose 20.9% last week and has an upside of 36% from its Friday close to the average price target, according to CNBC.
The importance of fundamentals
The Fed warned last week that interest rates will have to stay higher for longer. This means that stock fundamentals are more important than ever. Those that out outperform will likely be in demand, according to Wells Fargo’s chief equity strategist Chris Harvey. “[T]here’s only a handful of companies that can really power through, and there’s a scarcity value to the winners, so the marketplace puts a premium on that,” wrote Harvey in a note seen by Barron’s.
Battery component maker’s 81% upside
High-nickel cathodes maker L&F Co [066970.KQ] had plans to enter the US market through a partnership with battery materials recycler Redwood Materials. The plan is on hold, however, after the South Korean government decided its cathodes were a “national core technology”. Nevertheless, Morgan Stanley analysts reiterated an overweight rating for the stock and believe it could rally 81% through to the end of 2023, reported CNBC.
The right way to buy tech
Apple [AAPL] was the only big tech stock that didn’t reverse following last week’s dismal earnings reports. “If the macro-economic situation deteriorates, Apple’s stock will still be attractive, as it [is] leveraged to secular tailwinds,” Michael Yoshikami, CEO and founder of Destination Wealth Management, told CNBC. The right way to buy tech is to focus on solid business models and profit, not those reinventing their business, like Meta [META], he added.
Cineworld gets a brief reprieve
Beleagured cinema chain Cineworld [CINE.L] reached a bankruptcy settlement with lenders and landlords last week, which led to the share price soaring almost 200% the following day. Despite this brief repreive, mounting debt concerns are a problem as the international cinema group looks to rebuild its fortunes. While theatres have reopened since pandemic closures, former cinema-goers are cutting back on discretionary purchases like cinema tickets.
Ocado jumps on Korean partnership
Online grocer Ocado [OCDO.L] has inked a deal to build customer fulfillment centers, a type of automated warehouse, for South Korea’s Lotte Shopping. The Ocado share price jumped up 38.6% following the news. Providing technology and solutions to power third-party online grocery activities is set to become a critically important segment, especially as Ocado will be seeking to buffer against the impending sales drop it warned of in September.
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