OKTA - Okta Is Discounted For A Good Reason - Initiate Cautious Buy
2024-06-02 10:00:00 ET
Summary
- Despite the painful security breaches in January 2022 and August 2023, OKTA continues to report growing top/bottom lines, expanding multi-year backlogs, and elevated Net Retention Rates.
- These developments imply its ability to consistently cross-sell to existing consumers while driving new adoption, demonstrating its highly sticky cybersecurity offerings.
- Combined with the growing operational scale and optimized costs, it is unsurprising that OKTA has reported robust FQ1'25 numbers while offering promising FY2025 guidance.
- Combined with the healthier balance sheet and large Total Addressable Market size of $80B, the company remains well positioned to opportunistically invest in its growth ahead.
- As a result of the attractive risk/reward ratio, we are initiating a Buy rating for OKTA stock upon a moderate retracement for an improved margin of safety.