After seeing vicious sell-off in identity software company stock Octa (NASDAQ: OKTA) After a 70% drop from November to last month, they finally look ready to turn around. Investors have to go all the way back to January to find two consecutive green weeks, and even those aren’t convincing.But assuming yesterday’s 10% gains will continue into tonight’s close, if there is no improvement, they will have their own best looking couple Weekly candles since last year.
While we’re all familiar with rising inflation and rising interest rates as the main reasons for the aggressive sell-off, the reasons for this week’s jump are a little more specific to Okta itself. The company’s first-quarter earnings came after the bell last night and stunned investors in the best possible way.
First off, the big losses in bottom-line prints aren’t expected to be that bad, and top-line revenue comes with it much better than expected. The 65% year-over-year growth rate recorded in the quarter will provide a lot to think about as we head into the weekend. Given that Okta’s stock price has returned to 2019 levels while recording this kind of revenue growth, Wall Street will be asking itself whether the current price is justified.
Management’s forward guidance for second-quarter revenue was also well above consensus, which will force a recalculation of what fair value looks like. Todd McKinnon, CEO and co-founder of Okta, said: “We delivered solid results in the first quarter, which highlighted the strength of new customer additions, dollar-based net retention and our Success with large accounts as they continue their cloud journey. Organizations around the world are making it clear that identity is the foundation of their digital transformation projects and zero-trust security environment. Okta is a recognized leader in identity, and we believe in ourselves The ability to capture more with confidence Huge market opportunity. “
Unsurprisingly, their shares were already higher yesterday in anticipation of the report and closed at an impressive 10%. But in an after-hours meeting, it’s a whole different story. Okta shares rose another 18% following the data, and they looked happy to hold onto those gains in premarket trading on Friday.
bullish report The latest negative news for the San Francisco-based company’s stock will largely be dealt with. It’s just three weeks since Wells Fargo’s team lowered its price target on Okta stock. That’s a high $175, and to be fair, the new $130 still represents a 40% gain from last night’s close. Analyst Andrew Nowinski wrote in a note to clients at the time, “Our target multiple is a discount of 9x to the peer group average, which we believe is reasonable given the lower earnings assumption, partially offset by higher revenue. offset by growth assumptions.”
Nowinski and his team Reiterate Buy rating At the time, the move echoed that of the Morgan Stanley team, which did the same in late April. They also reiterated an Overweight rating while lowering their price target to $200 from $270, which would include a very attractive 110% northward move per share if the stock hits that target. Analyst Hamza Fodderwala said at the time that we think Okta has a lot to like due to “strong long-term tailwinds, larger deal opportunities in the fast-growing customer identity and access management space, and benefits of M&A synergies following the integration of Auth0’s sales force.” .
It will be interesting to see what other types of analyst updates are out now Earnings report for the weekOne thing is for sure, there are good reasons to think last week’s low of $78 will remain low for some time, and investors will now consider how high the stock can go compared to the opposite. Even with the rebound so far this week, the stock’s RSI remains below 30, indicating that it is still extremely oversold.we can expect Strong request to attend By the weekend, and now possibly the rest of the summer as well.