OKTA - Okta: Time To Take Chips Off The Table (Rating Downgrade)

2024-03-22 15:37:05 ET

Summary

• Okta's stock rallied after a data breach in October, but risks have emerged. Downgrading Okta to Neutral.
• Okta's valuation multiples are currently rich, sitting at ~7x EV/FY25 revenue and ~32x EV/FY25 FCF.
• Concerns include slowing customer growth, weaker net expansion trends, and the expectation of growth decelerating to the low teens soon.

Here’s a good “note to self” to remember: the headline risk from negative events, particularly surrounding data breaches, often wears out as fundamental stories regain momentum. This is exactly what happened with Okta ( OKTA ), the single sign-on and identity management software platform that reported a data breach in October. The stock dipped sharply after the breach and Q3 results reported in December cited a much larger-than-anticipated impact from the event....

For further details see: