Analyst Note| Mark Cash |
Narrow-moat Okta posted resounding 46% year-over-year revenue growth, beating CapIQ consensus estimates, as customers accelerate the demand for cloud-based identity and access management cybersecurity solutions in a distributed networking world. We believe that that shelter-in-home scenarios have forced entities to update their remote security solutions, with an emphasis on updating identity and access protection to be cloud-delivered. In our view, the acceleration of demand for Okta's products is not a transitory tailwind due to remote access requirements, but rather, Okta's solutions will be embedded within customers' networks for the long haul. While management expects the next couple of quarters to challenge its breakneck growth rate, we believe Okta's solutions are becoming more widely accepted by new customers and the company can proliferate additional products once landing a client. In turn, we increased our top-line growth rate beyond fiscal 2021, and we are raising our fair value estimate to $170 from $150. We view shares as fairly valued and recommend investors look for a pullback.