According to the U.S. Centers for Disease Control (CDC), the seven-day moving average of COVID-19 related hospitalizations has fallen 74%, from a January peak exceeding 122,500 to just more than 32,300 reported last week.
But despite the progress on the novel coronavirus, hospitals – still working 24/7 to save tens of thousands of lives – still haven’t been able to catch a break.
Hundreds of them, maybe even more, have found themselves under siege by a very different kind of “virus.”
I’m talking about ransomware. Hospitals and medical systems are the target of choice for hackers who burrow into networks and take control.
The reasons for this are very disturbing, and the impact is devastating – I’ll show you in a moment.
But there’s great news: A global, first-tier cybersecurity firm is working on a range of solutions to minimize and ultimately eliminate these costly cybercrimes. That’s one of the reasons why I’m projecting this company will double its earnings by 2024.
You have to move quickly on this one, though; it’s in the midst of a buying opportunity the likes of which we haven’t seen since late 2020, and there are signs it’s about to begin its next leg up…
How and Why Hackers Target Hospitals Specifically
Once they get in and take control, hackers steal sensitive information to use for their own nefarious purposes, or, very often, sell to the highest dark-web bidders. Oftentimes, they encrypt the targeted data and hold it “hostage” for ransom. Victims, totally locked out of their computer systems, are presented with a stark choice: pay hundreds of thousands of dollars to decrypt the hostage data and regain access… or lose it forever.
The demands depend on the target. An individual might be shaken down for $500 or $1,000. A big institution like a hospital or local government might be asked for $1 million or more.
Just this past weekend, in a situation that’s still developing, Acer Inc., a Taiwanese computer and electronics giant, was attacked and walloped with a record-high demand for US$50 million. If Acer doesn’t pay by March 28, it’s reported the crooks will double their ransom demand to $100 million.
During the pandemic, the attacks on hospitals intensified; as the stakes grew higher for patients and hospitals, criminal hackers upped their demands accordingly. According to Coveware, a company that helps negotiate with hackers, more ransomware attacks were made against healthcare in the fourth quarter of 2020 than any other industry.
The reasons are clear. Healthcare today is almost completely digitized. Medical records, lab results, scans, prescriptions – it’s all stored electronically. There are interconnected medical devices on the “Internet of Things” (IoT), as well. This all makes work much easier for the physicians, nurses, and techs who deal with it all, and it helps improve patient outcomes.
Unfortunately, it also makes healthcare a prime target for hackers.
In 2019 alone, the last year for which complete data is available, there were more than 760 such ransomware attacks on the healthcare sector. In light of Coveware’s report, it stands to reason that figure increased dramatically in 2020 and continues to run high.
There’s not much hard data on who choses to pay and who doesn’t; organizations can be reluctant to publicly discuss these things. But there’s some anecdotal evidence that suggests not paying the ransom can, in some cases, prove much more expensive.
Universal Health Services in King of Prussia, Pennsylvania, was hit with a ransomware attack this past September. Management refused to cave in; IT specialists replaced the computer systems.
That October, Sky Lakes Medical Center in Klamath Falls, Ore., had to completely shut down its computer network overnight to avoid losing everything to a ransomware attack. Electronic medical records, prescriptions, test results, MRI scans – everything was stored on those computers, and at the flip of a switch, it all became inaccessible.
Sky Lakes Medical Center restored its systems fully a month later – while dealing with spiking COVID-19 cases. It had to completely replace 2,500 computers and rebuild its network.
The cost to Universal Health Services was an estimated $67 million in lost revenue, labor, and new systems; Sky Lakes paid nearly $10 million to repair the problem.
That’s where today’s pick comes in. It’s a leader in the $140 billion cybersecurity sector – a sector Fortune Business Insights estimates will grow 12.6% a year to $281.7 billion by 2027.
Almost Everything Depends on Cybersecurity
Palo Alto Networks Inc. (NASDAQ: PANW) offers a vast suite of security tools used by large organizations all over the world, including, increasingly, healthcare providers.
Palo Alto makes secured network hardware and software, and it deploys artificial intelligence (AI) to scour a company’s physical and Cloud-based infrastructure for unusual activity and other signs of hacker intrusion.
Palo Alto doubled its Prisma Access subscriber headcount over the past year, to the point where a full third of Fortune 100 companies use Palo Alto’s Prisma Access platform to secure their Cloud operations. Its Cortex cloud cybersecurity AI is even more popular – two-thirds of the Fortune 100 use that platform.
The Cortex AI recently even thwarted a hack on Palo Alto itself.
Clearly, Prisma Access and Cortex are two standout products and a huge reason why Palo Alto Networks’ 1,800-plus clients yielded $4.3 billion in revenue in 2020, up 23% year over year.
But monitoring the way apps access networks can only do so much. As the recent SolarWinds hack showed, criminal network intruders are increasingly moving down the supply chain. Instead of hacking networks directly, they’re attacking the developers or chip makers that create the apps and hardware that make up those networks.
That way, the hack is “built in” to the network from the start, vastly more difficult to discover.
That’s why Palo Alto is moving to have its Prisma Cloud also secure the development and operations process of setting up networks to begin with. To do so, the firm just announced its acquisition of Bridgecrew, a cybersecurity company focused on securing developers, for $156 million.
Bridgecrew’s network-design scanner was released last year and has already been downloaded over 1 million times.
By integrating Bridgecrew’s developer-focused security scans into Prisma Cloud, Palo Alto will have the world’s first cybersecurity platform that can secure a network from design through operations.
Despite those huge strides, I still see plenty of upside ahead. In its most recent earnings report, Palo Alto revealed a 25% jump in revenue and a 30% jump in adjusted earnings per share, roughly double its three-year average.
After having looked through its financials, I’m projecting earnings growth of 24% a year, meaning it will double in roughly three years.
Incredibly, PANW shares are “on sale” right now, at compelling prices. The stock has been caught up in the broader weakness holding the tech sector down right now; there’s also been a boardroom shakeup and a new chief financial officer appointed.
Palo Alto stock is down nearly 21% from its February highs and trading at prices we haven’t seen since the middle of December. The shares have been consolidating for about a week now and, just yesterday, resumed what’s likely to be a short trip back to all-time highs and beyond.
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Source: Money Morning