Garmin Ltd.’s (GRMN - Free Report) unit, Garmin International Inc. has partnered with Blue Cross Blue Shield (BCBS) Association’s wellness program, namely Blue365.
Per the agreement, BCBS members can now avail a Garmin wearable at a reduced rate. BCBS members will now have an access to the health metrics of Garmin wearable devices, thereby encouraging improved health and wellbeing among them.
Blue365 is a health and wellness program for Blue Cross and Blue Shield members. It offers fitness-related deals to BCBS members from top national retailers and vendors. These offers are related to fitness trackers and gear, gym memberships, healthy eating options, stress management services, hearing aids, vision and dental products, among others.
The deal is inline with Garmin’s strategy of expanding its share in the wearables market. The company’s health metrics can now be used by more than 60 million BSBS members. This will definitely expand Garmin’s user base.
The latest move will also fend off competition from players like Fitbit (FIT), Apple (AAPL) and Alphabet (GOOGL), among others.
Strong Fitness Segment Growth
The Fitness business has continued to grow over the past few years. Management has gradually built Garmin’s product portfolio, through internal development efforts, deals and acquisitions. This segment develops technologies to enhance and promote healthy as well as active lifestyle among users.
Strength in this segment continues to be driven by a focus on location-enabled wearables and growing engagement on the Connect IQ App store. The Connect IQ App store has numerous apps, watch faces and widgets.
In the last reported quarter, its Fitness segment’s revenues decreased 34.9% sequentially but increased 8.6% from the year-ago period. The year-over-year increase was driven by strength in wearables.
It is clear that the company is on the right track with regard to product offerings and expansion plans.
We note that the BCBS deal will likely help it in attracting more members to the wearable platform. This will improve clientele, in turn driving its top-line growth.
Healthcare has been touted as the next most happening growth frontier for technology stocks. Increasing proliferation of wearables on the back of virtual reality (VR) is helping to address the mounting demand for healthcare applications, both from consumers and healthcare professionals.
In fact, wearables have become the most convenient way to track fitness. These smart wearable sensors not only aid in health monitoring but also in data analysis.
According to Markets and Markets, the global market for medical wearable devices is projected to reach $12.1 billion by 2021.
Notably, Garmin is beefing up initiatives in order to cash in on the growing trend. Management has gradually built its product portfolio for the fitness business, through both internal development efforts and acquisitions.
Zacks Rank and Stocks to Consider
Currently, Garmin carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Facebook, Inc. (FB - Free Report) , IAC/InterActiveCorp (IAC - Free Report) and AXT, Inc. (AXTI - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth for Facebook, IAC/InterActiveCorp and AXT is currently projected at 20.2%, 20.5% and 15%, respectively.
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