PHONIX FROM THE ASHES

OKTA |
A2DNKR Hardly any other cybersecurity stock has fallen as far in 2022 as the identity management specialist. A turnaround in interest rates should ignite the recovery turbo.

Interest rate hikes in the past year have weighed heavily on the shares of unprofitable tech companies in particular. One extreme example is cybersecurity specialist Okta, whose shares lost 85% of their value at their peak and are still trading below the corona low. However, the recovery has been underway since the end of November and should gain momentum in the event of a turnaround in interest rates.

Strong figures, top environment There are good reasons for the upward trend in recent months. The American company's turnover grew by 45% to around 1.9 billion dollars in the 2022/23 financial year, which ended on January 31. In the same period, operating costs rose by 27% and the net loss even fell by 4%, although it remained high at 815 million dollars.

The figures should also continue to improve in the current financial year. At the beginning of February, the management announced that it would cut five percent of jobs, around 300 in absolute figures, and had already set aside 15 million dollars for this in the fourth quarter.

Furthermore, the cybersecurity sector is far less affected by cuts in IT budgets than the rest of the software industry. According to market researchers at Canalys, the sector actually grew by 16 percent last year. The estimates of average annual growth in the sector of just under 13% until 2029 may therefore be too conservative.

Wall Street's expectations for Okta are also conservative. For the current financial year, both the analysts surveyed by Bloomberg and the company itself are forecasting sales growth of 17%. However, there is a good chance that the Americans will significantly exceed expectations for the seventh year in a row.

Attractive valuation

The cybersecurity specialist is active in an absolute growth market and is excellently positioned there. After the sell-off in 2022, the share is also attractively valued again, especially in the event of a turnaround in interest rates. Investors who are willing to take risks should buy Okta.