As healthcare transforms “before our [very] eyes,” tech enthusiast Gene Munster – from his research-driven, venture capital firm Loup Ventures – believes there is more than enough budding opportunity for the taking among various competitors, includes Apple Inc. (NASDAQ:AAPL).
In a week that has seen CVS buy Aetna to forge a new healthcare platform. This is a week that has also seen the tech titan enter into a partnership with Stanford to use the Apple Watch for conducting a medical study on atrial fibrillation, an irregular heartbeat condition afflicting at least 2.7 million Americans today. As Apple wearables storm into healthcare, the research analyst finds himself musing on this “pace of change” he is witnessing in the healthcare arena.
“Today, we see a shift toward two themes – personalization and prevention – and the future of healthcare will be grounded in the frequency of health monitoring […] Apple and Stanford aim to collect data on more people more frequently. The concept of increasing health monitoring frequency holds the greatest promise of actually making people healthier and the easiest approach to increasing frequency is through wearables,” Munster writes.
From the analyst’s point of view, the sustained advantages of health measurement are “twofold,” as “it allows for large-scale data collection from which AI algorithms can derive insights, and it keeps your health top of mind,” with Munster pointing out: “And it appears to be working, studies show that 70% of Apple Watch users track their heart health, even weeks after purchasing the device.”
However, do investors unanimously like the Apple Watch present-day? Munster says no, with some even dismissing it as a “dud,” noting that the Street up until now has been “spoiled by Apple’s vertical growth in new product categories with the iPod, iPhone, and iPad.” While Apple Watch may be experiencing a “slow start,” the analyst wagers that both the Watch and wearables within a decade’s time will comprise of a meaningful slice of future Apple revenue.
In fact, “As the health advantages of wearables begin to resonate, we foresee Apple selling as many them […] as they do iPhones,” Munster predicts, betting that with a wearable average selling price (ASP) of $300 at 250 million units sold per year would translate to a whopping $75 billion in yearly revenue for the tech titan.
While winning over sweeping adoption of health monitoring wearables will certainly not happen overnight, those resisting the transformation will eventually begin to fade, Munster concludes, acknowledging that in the meantime, Apple has the platform, powerhouse data, and artificial intelligence (AI) capacities to bring big-scale operations to life; all while using design savvy to fuse sensors in devices that appeal to consumer use.
TipRanks reveals Wall Street loves this tech stock, with 25 of 31 analysts in the last 3 months chiming in bullish on Apple and 6 playing it safe on the sidelines. With a return potential of nearly 11%, the stock’s consensus target price stands at $188.10.