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Analyst Blog

International Business Machines Corporation(IBM - Analyst Report) recently announced that its employees in the U.S. afflicted with cancer can access Watson - its supercomputer - that integrates artificial intelligence with advanced analytical software, to gain insight into their treatment and potential clinical trials.

IBM intends to start the service as early as Jan 1, 2017 for employees who are covered under its U.S. medical plan.

How Will it Work?

IBM has collaborated with Best Doctors, the leading online portal for providing expert clinical consultations. Once the patient consents, the Best Doctors team will delve into their medical records and feed the required data into Watson.

Based on this data, Watson will generate a report, which will then be analyzed by expert oncologists within the Best Doctors network to determine the best treatment available. The final assessment will be provided to the patient as well as the attending oncologist for necessary action.

What does this mean for IBM?

IBM is gradually foraying into the healthcare sector with its data handling capabilities, especially in the oncology segment. The company identifies poor resource allocation as the main cause that hinders proper patient care. 

Given the vast field of oncology where new studies, clinical trials and breakthrough treatments are released frequently, it is difficult for oncologists to keep track of the latest developments. Moreover, a particular treatment may be more effective for a specific type of cancer than others.

With IBM’s Watson, oncologists will be able to make more sense of the data at hand and thus will be in a better position to tackle the disease. 

As per a recent IMS Health report titled, Global Oncology Trend Report: A Review of 2015 and Outlook to 2020, the oncology drug market is estimated to be worth $150 billion by 2020 which is growing at a rate of 7.5% to 10.5% annually.

We note that competition is intensifying in the field of artificial intelligence applications with the presence of Alphabet Inc. (GOOGL - Analyst Report) owned Google’s DeepMind, and Microsoft Corporation’s (MSFT - Analyst Report) Microsoft Oxford.

However, with IBM Watson gradually gaining traction in the diagnosis space, the company looks poised to witness steady growth in the coming years.

Zacks Rank & Key Picks

At present, IBM has a Zacks Rank #4 (Sell).

A better-ranked stock in the broader technology space is Hewlett Packard Enterprise Company (HPE - Snapshot Report) , sporting a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Notably, earnings estimates for Hewlett Packard for the current year and the next have been revised upward to $1.92 (from $1.88 60 earlier) and $2.05 (from $2.02 earlier) respectively, over the last 60 days. 

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