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Bull of the Day: Okta (OKTA)
OKTAOkta(OKTA) ZACKS·2024-09-25 10:21

Company Overview - Okta is a 13billionproviderofidentitysecuritysolutions,specializinginensuringauthorizedITpersonnelareauthenticatedandmonitored[1][4]−ThecompanyisaggressivelypursuingnewAIthreatvectorstoenhanceitssecurityofferings[4]−OktarecentlyexpandeditsAuth0servicetoattractmorecorporateclients,increasingthefreeplanto25,000monthlyactiveusers(MAUs)andaddingfeatureslikepasswordlessauthenticationandcustomdomainsupport[7]FinancialPerformanceandMarketSentiment−Okta′sstockpricedroppedover1713 billion provider of identity security solutions, specializing in ensuring authorized IT personnel are authenticated and monitored [1][4] - The company is aggressively pursuing new AI threat vectors to enhance its security offerings [4] - Okta recently expanded its Auth0 service to attract more corporate clients, increasing the free plan to 25,000 monthly active users (MAUs) and adding features like passwordless authentication and custom domain support [7] Financial Performance and Market Sentiment - Okta's stock price dropped over 17% on the day of its late August earnings report and has declined by more than 25% since then [1] - Despite the stock price decline, the Zacks consensus EPS estimate for fiscal 2025 (ending in January) rose 7% from 2.40 to 2.57,representinga29XP/Eratioinanindustrywith90XP/Es[4]−LargeinstitutionswerenetbuyersofOktasharesinQ2,andtheaveragepricetargetamong34analystsisabove2.57, representing a 29X P/E ratio in an industry with 90X P/Es [4] - Large institutions were net buyers of Okta shares in Q2, and the average price target among 34 analysts is above 105, with a low target of 75[2]IndustryandCompetitiveLandscape−ThecybersecurityindustryisfacingincreasinglysophisticatedAI−poweredbotattacks,withbotsmakingupnearly5075 [2] Industry and Competitive Landscape - The cybersecurity industry is facing increasingly sophisticated AI-powered bot attacks, with bots making up nearly 50% of all internet traffic [6] - Okta's multi-factor authentication (MFA) and AI-powered bot detection have been effective, blocking 79% of automated login attempts and reducing bot traffic by 90% over a 90-day period [6] - Ransomware costs are expected to grow at a 30% CAGR from 35 billion in 2023 to $220 billion by 2030, highlighting the growing need for cybersecurity solutions [10] Strategic Initiatives and Product Development - Okta's Auth0 expansion aims to provide developers with scalable, secure, and customizable identity solutions, enabling them to build secure applications from the start [7][8] - The company's approach of providing powerful tools to developers mirrors successful strategies seen in other tech ecosystems, such as NVIDIA [8] - Okta is addressing the evolving threat landscape by enhancing its identity security offerings and leveraging AI to combat advanced cyber threats [4][5]