Okta (NASDAQ:OKTA) closed over 10% lower yesterday after analysts weighed in negatively on the company following reports of a digital breach.
Along these lines, Raymond James analyst Adam Tindle downgraded Okta shares to Market Perform yesterday, following Truist analyst Joel Fishbein Jr. who cut Okta to Hold from Buy on Tuesday.
Tindle claims he believes Okta could replicate Salesforce.com (NYSE:CRM) and become a platform cloud. However, this bullish thesis hasn't played out, hence forcing Tindle to move to the sidelines.
"Our channel conversations have suggested 1) a continually disconnected CIAM go-to market strategy (i.e. still separate reps for Auth0/Okta, no communication to incent channel cross-sell, no evidence of improved technology/integration as we discuss in our IT Survey.) While partners were willing to trust Okta's track record, the handling of its latest security incident adds to our mounting concerns. Additionally, 2) PAM/IGA have been lacking true technological functionality as we have discussed in numerous key partner webinars over the past few months, and Okta's handling of this security incident is likely to cause customers to pause in consolidating additional functionality onto Okta's platform," Tindle explained in a client note.
On the other hand, Goldman Sachs analyst Brian Essex joined BTIG in reiterating a Buy rating amid a selloff. Essex sees a buying opportunity in OKTA shares as they trade over 30% lower YTD.
"While the response may have been a bit slower than desired by some, considering initial communication with the company and additional detail provided by Okta today, we think the company illustrated that it took appropriate measures to manage the incident efficiently, and believe transparency provided will enable the company to maintain momentum with new and existing customers. We maintain our Buy rating and view the recent pullback as a buying opportunity," Essex wrote in a client note.
By Senad Karaahmetovic