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Wearable Devices Penetrating Healthcare: 5 Stocks to Watch

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Wearable technology has gained significant traction owning to advancements in AI, Machine Learning, Internet of Things, cloud computing, Big Data and data analytics. Such technology is being increasingly adopted by the healthcare industry for bringing innovation in various medical equipment and instruments, seamless management of health data and patient records, and pharmacy advancement.

Wearable devices, including fitness trackers and ear-worn devices, have been witnessing solid momentum with growing emphasis on health and fitness, as these aid in accurate personal health monitoring.

Per a Research and Markets report, shipment volume of smart wearables globally is projected to reach 776.23 million units by 2026, registering a CAGR of 19.48% during the period of 2021-2026.

Additionally, increasing interest in health and wellness monitoring, owing to rising health concerns induced by COVID-19, is spurring growth in the wearable market. According to the latest Gartner report, spending on wearable devices across the world is expected to reach $81.5 billion in 2021, suggesting growth of 18.1% year over year.

Moreover, smart watches connected to the Internet are gaining rapid adoption as they offer a wide range of features such as time, health monitoring and fitness tracking, calls and messages, entertainment, cardless payments, and connectivity to other IoT devices to improve the quality of the user's life.

The global smart watch market is expected to increase from $49.74 billion in 2020 to $59.02 billion in 2021 at a compound annual growth rate (CAGR) of 18.7%, per a Research and Markets report. The market is expected to reach $99.84 billion in 2025 at a CAGR of 14%.

Given the upbeat scenario, tech giants such as Apple AAPL, Alphabet GOOGL, Amazon AMZN, Garmin GRMN and Peloton PTON are putting in strong efforts to capitalize on the above-mentioned factors. Hence, the tech-driven healthcare battle has been intensifying.

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Apple’s Aggressive Stance Intensifying Competition

The solid adoption of Apple Watch Series 6, which features a blood oxygen sensor with additional healthcare and fitness features like Cycle Tracking, the Noise app and Activity Trends, has helped the iPhone maker strengthen its presence in the smart watch market.

In the first quarter of 2021, this Zacks Rank #2 (Buy) company witnessed 50% year-over-year growth in the demand for new Series 6 models, which increased market share of smartwatch shipment to 33.5%. Overall market shipments grew 35% year over year, according to a Counterpoint Research report. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Moreover, the availability of Fitness+ subscription services built for Apple Watch and the Health Records feature within the Health app for users in the United Kingdom and Canada have been key growth drivers in boosting the adoption of Apple’s Watch.

Alphabet’s Dominating Approach Creates Potent Threat

Recently, the company’s Google division entered into a multi-year partnership with the national hospital chain, HCA Healthcare, to accelerate clinical decision-making.

Additionally, the growing momentum of its Wear OS remains a tailwind. Additionally, the seamless synchronization of Wear OS with Google Fit and other health apps is a positive.

Moreover, Google and Samsung have teamed up for a joint software platform for smartwatches and other wearables that ramps up competition with market leader Apple. Samsung will use Google's Wear OS for its upcoming Galaxy smartwatches instead of its own Tizen platform.

Apart from this, this Zacks Rank #2 company has made notable healthcare efforts with regard to COVID-19 management. The introduction of a suite of fully-managed AI tools — Healthcare Natural Language API and AutoML Entity Extraction for Healthcare — remains a major positive. Also, the company rolled out Intelligent Vaccine Impact solution powered by Google Cloud.

Peloton Enters a Competitive Wearables Market

Peloton is venturing into the wearables market by working on a digital heart rate armband, per a Bloomberg report. It acquired Atlas Wearables, maker of a heart rate tracking fitness wearable, for an undisclosed amount earlier this year. Peloton also currently sells a $49 heart rate monitor that users can strap to their chest.

Meanwhile, this Zacks Rank #3 (Hold) company is optimistic about its connected fitness subscribers and digital products. As of Mar 31,2021, the company had over 5.4 million global members inclusive of nearly 891,000 digital subscribers.

Going forward, the company expects digital subscriptions to be a major growth driver for connected fitness products on the back of new fitness modalities and class varieties.

Amazon and Garmin Raise Challenge

Amazon made its foray into the smart wearables market by launching Amazon Halo and Amazon Halo Band, a fitness tracking service and a wearable.

Notably, Amazon Halo Band, which is an all-day wear water-resistant fitness band, comprises a heart rate monitor, a temperature sensor and an accelerometer. Moreover, it includes two microphones, an LED indicator light and a small sensor capsule for providing accurate data.

The launch of this Zacks Rank #3 company’s cloud-based healthcare service, Amazon HealthLake, is noteworthy. Notably, the service is a HIPAA-eligible one, which helps medical providers, health insurers, and pharmaceutical companies in analyzing their complete data at a petabyte-scale in the cloud.

Moreover, Garmin has been focusing on expanding its smartwatch portfolio. The company recently unveiled Descent Mk2S, a regular wear smartwatch with numerous underwater diving features.

In addition to the latest Descent Mk2S, this Zacks Rank #3 company has introduced the EnduroTM ultraperformance GPS watch with extended battery life to help athletes train well and monitor their performance.

With rising concerns surrounding healthcare and fitness as well as increasing chronic diseases, such diverse initiatives by the abovementioned companies are expected to intensify competition in the smartwatch space.

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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report

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