Why Health Care May Be the Next Growth Frontier for Apple and Tim Cook

Apple Inc. (NASDAQ: AAPL) remains the largest company by market cap. Its shares have ceased the endless gains and now the investing community has an issue with how to evaluate and to value Apple. Is it fair to ask if health care technology and services could become Apple’s next major growth frontier?

Merrill Lynch’s Wamsi Mohan reiterated his Buy rating and $130 price objective for Apple on Friday. The call and price’s upside is one issue, but the reason for the call is something entirely different. Mohan sees Apple positioning itself to have a large impact on health care ahead.

Mohan detailed in the report:

We believe that Apple is on the cusp of playing a larger role in the healthcare industry. The company continues to set the groundwork by building the various pieces of the ecosystem with Apple watch, iPhone accessories as sensory input devices, Health App alongside HealthKit, ResearchKit to facilitate storage and large scale analysis, and iPadPro (apps for Doctors). Apple with its vast proliferation of devices will be in a unique position to drive value to users in its ecosystem to better monitor their health and interact with medical professionals in a seamless way relative to current methods.

The introduction of the HealthKit and ResearchKit, the launch of the Apple Watch, and the partnerships with IBM Watson, the Mayo Clinic and Epic Systems suggest a strategic alignment in the health care industry that would be meaningful for the magnitude of Apple’s ecosystem and its attach rates.

Apple has committed strongly to user privacy, and CEO Tim Cook has alluded to how Apple does not monetize user information, contrary to other business models. Establishing this trust will be key to allow users to add sensitive health information to their devices. Also providing a secure platform that has the promise to make the health process more personal, informative and less onerous creates a much stronger bond to Apple’s ecosystem as well.

Shares of Apple were closed trading at $103.01 on Friday, with a consensus analyst price target of $135.92 and a 52-week trading range of $92.00 to $134.54.

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