#7 - Okta (NASDAQ:OKTA)
I suppose you could argue we saved the “best” for last. Okta Inc. (NASDAQ: OKTA) has had a whopping 11 analyst downgrades in the last 30 days. Each of these downgrades has been in the form of analysts’ lowering their price targets which are still above the stock’s price of $72.40 as of this writing.
Some of the pressure on OKTA stock may be a case of guilt by association. The cybersecurity sector has been under pressure since the CrowdStrike Inc. (NASDAQ: CRWD) software glitch that caused significant disruptions to consumers and businesses. To be fair, Okta has had its own share of security glitches that have caused the company to reinvest in the business at the expense of earnings.
The company is one of the leaders in identity security through its zero-trust features. Revenue continues to grow on a year-over-year basis and the company has recently launched several new AI-based cybersecurity tools.
About Okta
Okta, Inc operates as an identity partner in the United States and internationally. The company offers Okta's suite of products and services used to manage and secure identities, such as Single Sign-On that enables users to access applications in the cloud or on-premises from various devices; Adaptive Multi-Factor Authentication provides a layer of security for cloud, mobile, web applications, and data; API Access Management enables organizations to secure APIs; Access Gateway enables organizations to extend Workforce Identity Cloud; and Okta Device Access enables end users to securely log in to devices with Okta credentials.
Read More - Current Price
- $77.18
- Consensus Rating
- Hold
- Ratings Breakdown
- 12 Buy Ratings, 17 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $99.39 (28.8% Upside)
If you're new to investing, you may think that an analyst downgrade means that a stock gets a Sell rating. That can be true, but not always. First, unless a stock is egregiously overvalued or there is news that negatively impacts the company, analysts are reluctant to give a stock a Sell rating.
Second, there are times when selling shares (i.e. taking profit) may not be the best action for investors to take. Also, as mentioned in the introduction, analysts have many more ratings that offer more nuance for investors to consider.
And as this presentation has explained, a stock downgrade doesn't necessarily mean a rating downgrade. In many cases, it means that an analyst has lowered their price target for the stock. And in many cases, the new price target may be above the current stock price.
Nevertheless, many analysts downgrade stocks for valid reasons. Part of your due diligence is understanding what those reasons are. MarketBeat provides an Analyst Forecasts link for every stock. It's an easy way to keep track of what analysts are saying about stocks you own or those on your watchlist.
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