Okta is the IBD Stock Of The Day as the cybersecurity firm nears a buy point in the wake of holding its annual customer conference. Okta stock has gained nearly 26% in 2023.
The IBD Computer Software-Security group ranks No. 28 out of 197 industry groups tracked.
On the stock market today, Okta stock fell 3.8% to close at 84.60. Further, Okta stock has neared a 90.73 cup-with-handle buy point.
Last year, Okta stock dived nearly 70% amid sales challenges and a nettlesome acquisition.
Execution Issues In Rearview Mirror?
San Francisco-based Okta specializes in identity verification with software that monitors and manages privileged accounts. Hackers often target employees or management with administrative access to company computer systems.
"With Okta's go-to-market and sales execution challenges now largely in the rearview mirror, we believe the company is rebuilding confidence with investors that it can return to a more normalized growth cadence while also focusing on profitability," William Blair analyst Jonathan Ho said in a recent note to clients.
In early October, the cybersecurity firm hosted Oktane23, its customer conference in San Francisco. No financial update was provided. But Okta rolled out new products, including artificial intelligence tools.
Okta Stock: Taking On CyberArk
Also at the event, Okta said that in December it will launch a new product in the privileged access management market, taking on CyberArk Software.
At TD Cowen, analyst Shaul Eyal said in a report: "It remains to be seen whether OKTA could be challenging CYBR's pole position within the (privileged access) arena as the latter remains the undisputed leader."
Okta has been a share gainer in the identity security market. But it faces intensified competition from Microsoft, which sells multiple cybersecurity products to companies in discounted deals.
In March 2021, Okta agreed to buy Auth0 in a $6.5 billion all-stock deal. The Bellevue, Wash.-based company sells tools that help software developers build identity authentication capabilities into applications.
But integrating Auth0's business into Okta proved challenging, analysts say. At the same time, Okta faced hurdles in the enterprise market selling to large companies.
Okta Stock: Customer Conference
"Over the past few years, Okta has been execution challenged, but the last few quarters have been much improved," BMO Capital Markets analyst Keith Bachman said in a note. "Our view is that Okta management readily acknowledges past execution challenges and is keenly focused on more stable and improved execution. We think a new, strong go-to market leader will help."
Meanwhile, Okta stock has an IBD Relative Strength Rating of 95 out of a best-possible 99, according to IBD Stock Checkup. Its Composite Rating is 97 out of 99.
In addition, Okta stock has an Accumulation/Distribution Rating of A-, which indicates institutional buying of shares.
Second-Quarter Financial Results
In early 2023, Okta announced a restructuring plan to reduce operating expenses. It laid off 300 employees, or about 5% of its workforce.
On Aug. 30, Okta reported better-than-expected fiscal second-quarter results.
The company reported an adjusted profit of 31 cents a share, vs. a 10-cent loss in the year earlier period. Revenue rose 23% year over year to $556 million.
The company's fiscal 2024 sales outlook for Okta stock moved higher to $2.21 billion, or 19% growth, at the midpoint vs. its prior outlook of $2.18 billion.
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