Before the midpoint of each month, Merrill Lynch issues its well-followed RIC Report. This monthly report contains annual and long-term forecasts and other key trends seen by the firm’s top strategists. One such key review was the intersection where technology is changing how health care is being handled.
Merrill Lynch’s Wamsi Mohan and Nat Schindler commented on the trends shaping health care. The first consideration is that the Affordable Care Act is helping to push electronic health records. This meets the Internet of Things to allow individuals to track much of their own health without frequent doctor visits.
Three companies were highlighted by Merrill Lynch in the convergence of technology and health care. IBM was featured for Watson, Apple was featured (and not only for the Apple Watch), as was Fitbit. Merrill Lynch’s RIC Report for April 2016 said:
Some implications include predicting who is at risk of disease, assigning symptoms to disease, determining correlations between behavior and wellness, determining cures, enhancing patient/doctor communication, and allowing for more seamless and efficient care. With health care data expected to double in the next two years, the ability to leverage the available data to drive insights is pivotal, and several big tech companies are positioning themselves to do just that.
International Business Machines Corp. (NYSE: IBM) already has seen its shares bounce handily in 2016. Merrill Lynch sees IBM’s Watson as building the technology to take the massive amount of data available across many sources to run analytics and drive insights.
A partnership with Apple is helping to build a comprehensive patient profile to allow individuals, institutions and medical providers to employ specific and sensitive comprehensive data to derive insights to enhance health.
Merrill Lynch said that Watson can aggregate data on existing patents; chemical properties and structures; genetic, metabolic and proteomic information; and research on over 7 million diseases. It can also mine data to identify patterns more easily than the scientific community.
Unlike the other two stocks featured in health care and IT, Merrill Lynch rates IBM only with a Neutral rating rather than a Buy rating. The firm previously had a $135 price objective for IBM, but in late-March that target was raised to $155.
IBM’s consensus analyst target was last seen at $136.32, and its 52-week trading range is $116.90 to $176.30. IBM’s market cap is $143.5 billion.
Of course Apple Inc. (NASDAQ: AAPL) has the eponymous smartwatch, but Merrill Lynch highlighted other aspects of Apple as being on the cusp of playing a larger role in the health care industry. This is for establishing stringent privacy controls and to be a player in the mass aggregation of health-related data.
Merrill Lynch showed that Apple has the Apple Watch, iPhone accessories as sensory input devices for its Health App, alongside HealthKit and ResearchKit, to facilitate storage and large scale analysis of medical research data.
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