Here’s a fact that could make your blood pressure spike.

Hospitals are becoming big targets for cybercrimes – they’re up 2,860% in a decade.

But these breaches don’t get much notice from the media or Wall Street.

Instead, we always hear a lot when there is a big company involved. Just think back to the September 2017 hack at Equifax Inc. (NYSE:EFX).

In a very high-profile case, we learned that as many as 147 million accounts with financial information were compromised by a hack into the servers at the leading credit-reporting agency.

While they don’t have a lot financial data on hand, hospitals do maintain details about virtually every aspect of your health.

Even worse, a major intrusion can lead to healthcare interruptions, even with surgeries.

Indeed, analysts note that the WannaCry and NotPetya intrusions two years ago had that exact effect, though they don’t provide data on the number of cancelled operations.

What savvy tech investors need to do in a case like this is identify a best-of breed cyber firm with lots of upside ahead.

And that’s just what I am going to show you today…

Why Hospitals Are Targeted

Hospitals and healthcare firms are becoming enticing cyber targets for two main reasons.

  1. The move over the past decade or so to digitize paper records for millions of patients. It improves efficiencies but leaves computers open for attacks.
  2. The growing use of all kinds of digital medical devices, including wireless monitoring systems. Nearly all of them contain software, putting thousands of new access points in reach of talented hackers.

And while the overall number remains lower than for the economy as a whole, healthcare intrusions are climbing at an alarming rate.

Data compiled by the Department of Homeland Security and the Privacy Rights Clearinghouse show that in 2009, the sector suffered a mere five hacks.

By last year, that number climbed to 148, for a 2,860% increase in just 10 years. During that period, the medical records of more than 150 million Americans were exposed to cyber thieves.

No wonder hospitals now rank as one of the riskiest sectors from a cybersecurity standpoint, according to the credit-rating agency Moody’s Investors Service.

As a result, hospitals and healthcare firms are scrambling to add more security safeguards.

And that spells big money for a cyber-leader that can protect data stores at company servers, the cloud and devices, often referred to as “endpoints.”

Even better if the firm also targets the broad cyber field. MarketsandMarkets says the industry is now worth $152.7 billion. But by 2023, it will have a value of roughly $248.3 billion.

That’s where Palo Alto Networks Inc. (NYSE:PANW) comes in. Technically speaking, it doesn’t specialize in healthcare cyber protections.

Instead, it offers a suite of tools in high demand by large organizations across the board, including health-related firms.

Consider that Palo Alto forecasts that just the endpoint market, which includes digital medical devices, will be worth $5.2 billion by the end of next year.

A Growing Target Market

Palo Alto Networks makes the best firewall network security systems in the business, and has industry-leading growth rates to prove it. Five years ago, the firm had less than $600 million in sales. This year, that figure should approach $3 billion.

In February, the company used part of its war chest to increase its healthcare penetration. It paid $560 million to buy Demisto, a leader in automated security with a strong healthcare focus.

Even before that move, Palo Alto counted some 2,000 healthcare clients. The firm notes this segment is a growth field – 90% of respondents to a recent healthcare survey said they were targets of attempted ransomware attacks, in which thieves use hacks to extort money from victims.

And while Palo Alto has been able to grow that large by focusing on network protection, a pair of new threats have emerged. And each brings us a major new sales growth driver.

The first is the emerging bring-your-own-device (BYOD) trend. With BYOD, employees use their personal smartphones and tablets for work.

Market Research Future estimates the global BYOD market will grow 37% per year through 2023, at which time it will represent $69 billion in IT management dollars.

The second major IT security trend pivots on the Internet of Things (IoT). Billions of IoT devices will each represent a security threat to networks. This includes the growing use of IoT devices and networks in medical centers.

Thanks to an expanding set of cyber protection tools, Palo Alto figures it targets $24 billion of that total spend. That’s up from target markets worth $19 billion in 2017, before the firm rolled out its latest tools.

One key new area, as an example, focuses on the security framework in place for apps, and the servers that host them.

This is a firm that shows no signs of slowing. In the most recent quarter, Palo Alto picked up 59,000 new clients. That’s 23% more new client wins than the year ago quarter. And over time, each new client signs up for additional features in the Palo Alto tool set.

Palo Alto got its start as a government contractor. And Uncle Sam remains a major client. But since then, the firm has been cultivating a range of new clients in industries like media, telecom, financial services, defense and insurance.

Many of those clients sign up for long-term deals, and Palo Alto is now sitting on $2.53 billion in backlog, a company record.

On the road ahead, Palo Alto is laying plans for the next waves of growth. The firm is targeting automation, artificial intelligence (AI) and machine learning.

For example, Cortex is a new AI-based security platform deployed on the public cloud.

Its first application will provide advanced detection, investigation, and response capabilities with faster response times and increased automation. The idea is to leverage AI and behavioral analytics across networks, endpoints, and cloud data.

Momentum in Place

Here we have one of the premier cyber protectors aimed at the fastest-growing segment of IT budgets.

And Palo Alto has clear momentum in place, as earnings have topped estimates by an ever-larger amount for four straight quarters.

Look for profits to grow more than 35% this year, and at least 20% in the early years of the next decade.

So we are looking at a double in as little as three years.

Add it all up, and you can see that this elite tech stock will put you in the fast lane on the road to wealth.

Cheers and good investing,

Michael A. Robinson

Source: Strategic Tech Investor