2 Cathie Wood stocks that could rise 32% and 282%, according to Wall Street

Should investors take the advice of the big names on Wall Street? A challenge in doing this is that sometimes analysts have very different opinions. Fortunately, there is agreement on other occasions.

Consider these two companies: Block (SQ 3.87%) and Intellia Therapeutics (NTLA 0.28%). Both are among the picks of Cathie Wood, CEO of a famous investment management firm. These stocks also have consensus price targets from Wall Street analysts that imply significant upside.

Should you consider buying shares of Block and Intellia Therapeutics on this basis? Let’s find out.

1. Block

Block has had a rough year, with the company’s shares down 14% year to date. Although sales are still moving in the right direction, growth rates have slowed in recent years and are to some extent influenced by Bitcoin-related income. This area of ​​Block’s business is somewhat unpredictable, which the market doesn’t like.

On the other hand, Block is making progress on the bottom line; the company has posted profits for the past three quarters in a row. If it can sustain this profitable growth, the stock could rebound. But could he live up to the Street’s expectations in the coming year?

Analysts’ average price target for the stock is $87.12, representing an upside of about 32% from the stock’s recent price of $66.05. My view is that Block is unlikely to hit this target as there are no significant catalysts ahead for the stock. While Bitcoin’s fluctuations could help boost its earnings, they could also do the opposite — it’s hard to predict which.

Plus, Block doesn’t appear to be deeply undervalued. True, its forward price-to-sales ratio is 1.6, and the “undervalued” range typically starts at 2. However, Block’s forward price-to-earnings ratio is 18.6, slightly higher than the average of 16 for the financial industry.

Beyond the next 12 months, could the company deliver excellent long-term returns? In this department, I think there is good reason to be optimistic. Block’s core ecosystems continue to perform well. These include its suite of tools for small and medium businesses through Square. And its peer-to-peer payment app, Cash App, now offers various options that rival banks, from direct deposits to stock and cryptocurrency trading to a debit card.

In the second quarter, Square’s gross profit rose 15% year over year to $923 million, while the Cash app reached $1.3 billion, up 23% from last year. the period a year ago. Total gross profit increased 20% year-over-year to $2.23 billion. And net income of $195 million was much better than the $102 million net loss reported in the year-ago period.

Block has generally improved its platform by offering more services, thereby attracting more customers. The company’s strong position in fintech and large existing ecosystem make it a good choice to take advantage of long-term opportunities in the industry.

2. Intellia Therapeutics

Over the past few years, investors have shied away from somewhat promising but speculative and unprofitable businesses. That description fits Intellia Therapeutics to a T. The gene-editing biotech looks like an innovative company. It currently has no approved products, but Intellia is making steady progress.

The company’s lead candidate is NTLA-2001, which is being developed to treat transthyretin amyloidosis (ATTR), a rare disease caused when a transport protein called transthyretin fails to fold properly. This leads to various symptoms including stomach pain, difficulty breathing and walking and more. There are two types of ATTR amyloidosis: the hereditary version, which affects about 50,000 people worldwide, and the wild-type (which comes with aging), which affects between 200,000 and 500,000 people.

Intellia is now enrolling patients in a Phase 3 study of NTLA-2001 to treat ATTR amyloidosis with cardiomyopathy (a group of heart-related problems). Another late-stage study in hereditary ATTR amyloidosis is also expected to start by the end of the year. There are no cures for this disease yet; NTLA-2001 could be the first.

The biotech has several other pipeline candidates. NTLA-2002, a potential therapy for hereditary angioedema (a disease that causes swelling under the skin) could begin a Phase 3 trial this year after passing Phase 2 clinical trials. And Intellia could have more catalysts , mainly data readings from his ongoing studies, over the next 12 months. If the data is generally positive, the company’s stock will almost certainly rise.

However, the Wall Street stock price target of $67.92 implies a 282% upside from the stock’s recent price of $17.77. In my opinion, that seems too optimistic a goal to achieve within 12 months, even given how volatile biotech stocks can be. Gene editing therapies are expensive and complex to administer, which often limits their revenue potential, even when there are no other treatment options for a disease. That adds to the risks of investing in Intellia right now, beyond the fact that its stock will fall off a cliff if there are significant clinical or regulatory headwinds.

So Intellia Therapeutics is somewhat of a risky play. If you’re comfortable with increased volatility, you may want to consider starting a small position in the stock given how much the stock has fallen in recent years and how much it could rise if the company’s programs progress smoothly.