Morgan Stanley analyst Hamza Fodderwala raised his price target to $315 from $275.
Okta stock recently traded at $235.38, down 2.5% and in line with broadly lower tech stocks. The Nasdaq Composite Index at last check was off 2.66%.
“Okta is a share gainer in a growing market for identity and access management,” he wrote.
“After [a] slower top line over the past year, an improving demand environment and more buy-in with developers should drive stronger growth and upside in estimates.”
A key detail: “An increasingly distributed workforce has created more challenges for enterprises to effectively secure employee access to applications and data,” Fodderwala said.
“This dynamic is shifting a greater portion of security budgets towards identity and access management, which is becoming a more central control point in enterprise security architectures,” he said.
“Okta is the market leader in [identity and access management] with a cloud-native identity platform, growing network efforts and expanding product portfolio that is well positioned to take greater share of a $40 billion market.”
Further, “While investors remain concerned due to top-line slowing over the past year, we think much of this was related to a temporal shift in spending,” Fodderwala said.
That shift came as enterprises prioritized enabling their employees to work from home. Companies are now "refocusing on larger, strategic initiatives to modernize their IAM infrastructure to secure a larger remote workforce.”
So "growth is now stabilizing and should prove more durable versus the consensus view as demand improves.”