Image Source: Wiyre Media
By Brian Nelson, CFA
Apple (AAPL) is expected to do a refresh of its Apple Watch this year, but the changes won’t be as significant to draw many to upgrade. However, as we look out to fiscal 2024 and fiscal 2025, exciting things could happen. According to a report from Bloomberg, the “Watch X,” marking the 10th anniversary of the rollout of the first Apple Watch, is targeted to include a blood-pressure monitoring tool, among other upgrades. Not only do we think a blood-pressure monitoring tool will drive considerable adoption from many that do not have a smartwatch, but it could also drive a huge market share shift to the device from Samsung (SSNLF) (SSGFF) and Alphabet’s Fitbit (GOOG) (GOOGL).
For starters, we think many individuals living an active lifestyle and/or those with hypertension may be very interested in adding the new device to their suite of consumer electronics. According to a report by Grand View Research, “the global blood pressure monitoring devices market size was estimated at USD 4.5 billion in 2022 and is projected to expand further at a compound annual growth rate (CAGR) of 9.4% from 2023 to 2030.” By itself, people are becoming more and more interested in monitoring their health, and blood-pressure monitoring, in particular, is of considerable importance given that hypertension raises the risk of all sorts of diseases.
The World Health Organization estimates the number of people between the ages of 30-79 years living with hypertension has increased to 1.28 billion, up from 650 million in 1990. Though wealthy nations have experienced improvements in rates of hypertension, population growth and ageing have driven the advance, while a shift to lower- and middle-income countries has played a role. Apple continues to dominate the smartwatch category, with estimates indicating that the number of Apple Watch units sold hit ~53.9 million in 2022. If Apple can incrementally attract even a small percentage of people living with hypertension to adopt its “Watch X,” we’re looking at quite the earnings catalyst come 2024 or 2025, in our view.
A couple months ago, we noted that Apple’s ‘Vision Pro’ could spell upside to its fiscal 2024 and fiscal 2025 numbers, and now it’s looking likely that Apple could spark a huge jump in sales of its Apple Watch, after this year’s iteration, if it able to successfully deliver on embedding blood-pressure monitoring technology to the “Watch X” (it has been reported the company has had trouble embedding this technology in the past). We continue to like Apple’s cash-based sources of intrinsic value: its net cash position remains solid, and future expectations of enterprise free cash flow remain robust. We remain fans of shares.
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Brian Nelson owns shares in SPY, SCHG, QQQ, DIA, VOT, BITO, RSP, and IWM. Valuentum owns SPY, SCHG, QQQ, VOO, and DIA. Brian Nelson’s household owns shares in HON, DIS, HAS, NKE, DIA, and RSP. Some of the other securities written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.
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