Gene Munster: Apple’s healthcare opportunity is not currently priced into AAPL shares

“Tim Cook commented in a recent interview that their impact on health will be ‘Apple’s greatest contribution to mankind.’ While ‘greatest contribution’ doesn’t necessarily mean ‘biggest business,’ it may mean Apple would pursue a path toward improving primary healthcare by leveraging wearables, AI, and their user-centric software to connect consumers, providers, and payers,” Gene Munster writes for LoupVentures. “We believe the healthcare opportunity is not currently priced into shares of AAPL.”
“Apple’s approach to the Healthcare industry is largely unknown. What we do know is the Apple Watch and eventually AirPods create new ways for consumers to track and manage wellness, notably by tracking heart rate, activity, and heart health. In the future, we expect the company to add biomarkers like blood pressure and hydration,” Munster writes. “The wearables segment represents a measurable revenue opportunity given it’s small today and foundational to Apple’s healthcare master plan. Wearables (90% of which is Watch and AirPods, 10% Beats) account for 5% of sales today, and we expect that to grow to ~8% of sales in five years.”
“We believe Watch sales have reached 67m units since the product was released in mid-2015 and estimate 85% of those are still in use, resulting in an active installed base of 57m,” Munster writes. “We can build a case that the Watch business will eventually be 4x bigger than today, which would imply $35B in annual sales, compared to $8.8B in FY18. Factoring in an asp of $300 yields 115m annual units, up from about 23m at a $375 asp last year.”
“Apple’s healthcare services opportunity likely lies in harvesting the data from Watch and AirPods, then filtering, analyzing, and making it actionable. AI will be foundational to these services given the volume of data that needs to be processed,” Munster writes. “The offering would likely start with the consumer paying ~$300 for a Watch that captures heart rate, activity, sleep, temperature, blood pressure and makes the data actionable, then the physician would pay Apple a per month per user fee (~$10).”
Much more in the full article – recommended – a href=”https://loupventures.com/apples-likely-healthcare-roadmap/” target=”_new”>here.
MacDailyNews Take: Health and wellness is a yet another (massive) among many opportunities (present and future services and products) that’s not priced into AAPL shares.
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