Apple Inc. (AAPL) Finds Its Latest Catalyst in Aetna Inc (AET)

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Maybe the Apple Inc. (NASDAQ:AAPL) Watch isn’t such a dud after all. Despite slow early sales after its April 2015 debut, and little to no impact on AAPL stock, the Apple Watch has been steadily gaining traction in the wearable technology market of late. Now it’s capturing the attention of a major health insurer.

Apple Inc. (AAPL) Finds Its Latest Catalyst in Aetna Inc (AET)

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Apple is reportedly in talks with Aetna Inc (NYSE:AET) to offer its health and fitness-tracking smartwatch as a free or heavily discounted perk to its customers. Aetna currently insures more than 23 million people.

Considering that 21.6 million total wearable devices were shipped worldwide in the second quarter, the payout for Apple’s Aetna deal could be big.

But the money is not what’s important here — not to a company that has $77 billion in its coffers. More important is what a deal with Aetna represents for Apple: its first real foray into the healthcare industry.

Because there are far more people with health insurance than Apple products (particularly the Apple Watch), it’s a way for the company to introduce items like the Watch to a whole new demographic.

Apple Watch Growing

Additionally, Aetna’s interest in the Apple Watch is a nod to the growing interest in the product. In the first quarter, the Apple Watch surpassed Fitbit Inc (NYSE:FIT) as the top-selling wearable tracker, with 22 million shipments. It fell back to third place in the second quarter, leapfrogged by Fitbit and Xiaomi, a Chinese device maker. But with the Apple Watch 3 due out later this year, Apple could quickly reclaim the top spot by Christmas.

According to reports, future versions of the Apple Watch will feature health sensors that track things like blood sugar levels, which would appeal to diabetics. With the Aetna deal supposedly on track for early next year, perhaps the new health sensors will be part of the Apple Watch 3.

Regardless, the mere fact that people are talking about the Apple Watch is a victory. When it debuted in April 2015, the Watch failed to move the needle for AAPL stock.

In fact, it coincided with a one-year downturn in Apple stock, as Apple’s sales began to slip. Now Apple’s sales are improving again, and Apple Watch is contributing to that growth.

The company is still driven by iPhone sales, and the iPhone 8 release later this year is much more pivotal to the company’s success in the intermediate term. But the Apple Watch is no longer the afterthought it seemed destined to become, and a deal to furnish Aetna customers with the product could expedite its growth and further enhance its importance to the company.

If the Aetna deal gets done, the Apple Watch will, perhaps for the first time, move the needle for AAPL stock. Bigger picture, it gets the company’s foot in the healthcare door, which could be a major source of new revenue going forward at a time when the iPhone is clearly reaching a saturation point.

Given Apple’s struggles to come up with new products in recent years, a move into healthcare would at least be a fresh look for a company that is starting to grow stale.

AAPL Stock Surging

Meanwhile, AAPL stock is touching fresh all-time highs and is up 38% year to date. Stale or not, AAPL has plenty of momentum, and the resurgent sales to sustain it.

Wall Street excitement about the company may not be what it once was, but Apple stock is still plenty health enough to have in your long-term portfolio.

As of this writing, Chris Fraley did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2017/08/apple-inc-aapl-talks-deal-with-aetna-inc-aet-for-apple-watch/.

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