Tiffany Hagler-Geard/Bloomberg
stock is getting a boost from
Analyst Brian Essex picked up coverage of the identity-management software company with a Buy rating and a target of $312 for the stock price. That is 27% above the stock’s Monday close at $245.55
Essex wrote in a research note that his call on Okta (ticker: OKTA) reflects expectations that the company will continue to benefit both from growing adoption of cloud computing and the continuing trend toward digitization. He said the company has won a leading position in the market for cloud-based access-management software, controlling which employees can use which applications, and it has gained in related markets for customer and partner- system access.
Essex is upbeat on the company’s recently completed $6.5 billion acquisition of Auth0, which provides software to control customer access to web-based applications and services. And he said a selloff in the stock that followed the acquisition and the recent surprise departure of CFO Mike Kourey was overdone.
The Auth0 acquisition gives Okta a chance to establish itself as a dominant player in the market for customer-identity and access-management software. “We believe Auth0 will provide Okta with better exposure to developers, greater penetration of International markets, additional integration capability, and additional visibility into [identity software] usage patterns,” he said, though he noted that the deal will trigger some near-term margin compression and share count dilution.
“Okta is well positioned to benefit from tailwinds in one of the most critical areas of IT spending,” Essex wrote. “As we remain in an elevated threat environment, we see focus on Identity intensifying.”
Okta shares were up 1.8%, to $249.91 on Tuesday morning, while the
was marginally higher. The stock is down about 2% year to date.
Write to Eric J. Savitz at eric.savitz@barrons.com
