IRhythm Still Kicking After Shock Of Apple Competition

Irhythm Technologies Inc IRTC dropped as much as 10.6 percent Wednesday after Apple Inc. AAPL announced FDA approval for an ECG scanner in its Watch Series 4.

But as Street experts see it, the jolt is far from lethal — it’s galvanizing.

The Rating

JPMorgan analyst Robbie Marcus maintained an Overweight rating on iRhythm with a $100 price target.

The Thesis

By JPMorgan’s assessment, Apple’s FDA-sanctioned feature poses no competitive threat to iRhythm’s Zio XT or AT technology.

“We don’t see Apple turning the iWatch into a regulated medical device approved for clinical diagnosis,” the analyst said in a note. (See Marcus' track record here.)

“To be clear, the Apple Watch is approved for over-the-counter use and is not a continuous monitor.” 

The FDA said the Apple Watch is not a replacement for traditional diagnostic or treatment methods. Should Apple pursue such a label and place itself in direct competition with iRhythm, the process could slow Apple’s rate of innovation and subject its products to FDA regulation, according to JPMorgan.

At present, its specialty in preliminary, OTC screenings is seen to complement iRhythm technology.

“Instead, we expect that greater consumer preliminary screening for heart arrhythmias will only expand the number of patients seeking medical diagnosis, which, in turn, would benefit iRhythm,” Marcus said.

“If anything, this news could be seen as a win for the company, as more patients will be able to check their own heartbeat and then go into the office to be prescribed a Zio in order to get a more comprehensive analysis of their heart health.”

Price Action

At the time of publication, iRhythm shares were trading up more than 5 percent at $94.14. 

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