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Bank of America analysts initiated research coverage on Okta (NASDAQ:OKTA) with an Underperform rating and a $64 per share price target, which suggests a downside risk of over 16%.
The analysts see a heightened risk of slowing growth and limited margin upside due to Microsoft (NASDAQ:MSFT) competition, pricing erosion, channel conflicts, and other structural challenges.
“The Street is modeling 18% revenue growth over the next two years; however, we think that is too optimistic and instead model growth of 16%…Street consensus is calling for Okta’s CIAM business to grow 28% 4-yr CAGR, yet we believe this target is aggressive and model instead a more modest growth rate of 23%,” they wrote in an initiation note.
Along these lines, the analyst’s FY24/25 estimates are 2% and 11% below consensus, respectively.
“We expect the stock to underperform, even after the -60% decline over the last 12 months,” the analysts added.
Okta shares are down almost 3% in pre-market.
