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Cybersecurity Gains Prominence in MedTech: 3 Stocks to Focus on

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Over the past few months, the U.S. MedTech sector has been witnessing widespread use of technology, ranging from storing health records in cloud space to remote patient monitoring. Medical devices are increasingly being connected to other devices, the Internet or hospital networks via technology in order to serve functions that improve healthcare and enhance treatment options.

Major advances in wireless technology, miniaturization and computing power are driving innovation in MedTech, leading to the development of an increasing number of connected medical devices that are able to generate, collect, analyze and transmit data. The data along with the devices are creating the Internet of Medical Things (IoMT) — a connected infrastructure of medical devices, software applications, and health systems and services.

With increasing prevalence of technology in healthcare, the issue really boils down to the safety of confidential patient data.

Cyber Threats to MedTech

In recent times, the IoMT has been rapidly transforming MedTech’s role and relationships within healthcare. Per a report by AllTheResearch, the global IoMT market was valued at $44,565.6 million in 2018 and is expected to reach $254,233.6 million in 2026, at a CAGR of 24.4%. Factors like growing adoption of sensor-based technologies and wearable or stand-alone devices for patient monitoring as well as rising demand for connected devices in the healthcare sector are expected to drive the market.

Realizing the potential in the MedTech sector’s dependence on technology and connected healthcare, well-known MedTech player Masimo Corporation (MASI - Free Report) deserves a mention. The company, this month, announced the CE marking and commercial launch in Europe of the single-patient-use adhesive rainbow SuperSensor, compatible for use with both Masimo and third-party monitors with Masimo rainbow technology inside.

Continuous innovation in healthcare technology has led to the growing use of artificial intelligence (AI). However, with increasing dependence on AI, it makes it susceptible to cyberattacks, which can be used to discover and exploit vulnerabilities. Cyberattacks may impact the confidentiality, integrity or availability of data, devices and networks. Information security and privacy issues, like lack of confidentiality, can have adverse impacts on compliance efforts. Plus, if connected medical devices get compromised due to cybercrime, the integrity of patients’ medical records becomes questionable, which can prove to be harmful for such patients.

Cybersecurity in MedTech

Cyber threats are increasingly becoming a significant challenge for the connected industries. Per a report published on Comparitech, 92 individual ransomware attacks impacted more than 600 separate clinics, hospitals and organizations and more than 18 million patient records in 2020, the estimated cost of which was approximately $21 billion.

The spike in cyber threats is currently compelling the healthcare sector to bolster its cybersecurity methods and ensure strong implementation of legal frameworks. A primary area wherein the companies can help address these threats and protect the safety of patients and healthcare providers is password management. The MedTech players can implement strong password policies without compromising on user experience.

Supporting the MedTech sector in its cybersecurity fight, the FDA has made it clear that cybersecurity should essentially be part of medical device manufacturers' quality management systems. It has set the need for static and dynamic code analysis, penetration testing and other technologies to manage medical device cybersecurity risks.

Given the increasing threat to data security in healthcare along with the potential cost attached to it, cybersecurity has been gaining momentum in recent times.

3 Stocks to Focus on

Here we have listed three stocks from the MedTech space which have been quite active on the cybersecurity front and have performed impressively in recent times.

Key global distributor of health care products and services, Henry Schein, Inc. (HSIC - Free Report) , is the first stock investors can look at. This Zacks Rank #2 (Buy) company’s medical business, Henry Schein Medical, entered into a distribution agreement with Black Talon Security LLC in March to help physician practices mitigate ransomware attack risks alongside lost revenues. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Its long-term expected earnings growth rate is pegged at 13.9%. The company is expected to report full-year 2021 revenue growth of 18%. Year to date, the stock has gained 17.2% against the sector’s 3.6% fall.

Veeva Systems Inc. (VEEV - Free Report) , a renowned cloud solutions provider, is our next stock that the investors can turn their attention to. This Zacks Rank #3 (Hold) company has been maintaining as well as continuing to improve its security measures to counter any potential cyberattack and data theft. Further, Veeva Systems continues to invest in the more enhanced and modern infrastructure available to offer an innovative, scalable, global, predictable and secure environment.

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Its long-term expected earnings growth rate is pegged at 18.2%. The company is expected to report full-year fiscal 2022 revenue growth of 25.1%. Year to date, the stock has gained 12% against the industry’s 4.5% fall.

Renowned global medical technology company, Becton, Dickinson and Company (BDX - Free Report) , popularly known as BD, is the final stock on our list. This Zacks Rank #3 company became the first medical technology company was authorized as a Common Vulnerability and Exposures (CVE) Numbering Authority by the CVE Program in June 2021. As a CVE Numbering Authority, BD will be authorized to assign CVE identification numbers to newly-discovered vulnerabilities in its software-enabled products.

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Its long-term expected earnings growth rate is pegged at 8.3%. The company is expected to report full-year fiscal 2022 revenue growth of 16.9%. Year to date, the stock has gained 4.9% against the sector’s 3.6% fall.