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Okta (NASDAQ:OKTA) fell 8.3% in early trading on Monday after dropping Friday on the disclosure of yet another security breach. Analysts are on alert.
Last week, Okta Security identified “adversarial activity that leveraged access to a stolen credential to access Okta’s support case management system,” Chief Security Officer David Bradbury said in a blog post.
Evercore ISI put Okta (OKTA) on its tactical underperform list after this second major breach in two years, as well as the company’s connection to recent attacks on MGM Resorts International (MGM) and Caesars Entertainment (CZR).
“This decision is rooted in our concern that these events will most likely have a [near-term] impact on OKTA’s pipelines, potentially forcing a downward revision to [fiscal 2024] estimates and jeopardizing consensus estimates for [fiscal 2025],” analyst Peter Levine, who has an In Line rating on the stock, wrote in a note.
Citi, which has a Neutral on Okta (OKTA), pointed out that the scope of the breach is unclear, but even if contained, “we believe the larger issue at hand is the negative impact on sentiment from the pattern of cyber breaches OKTA has experienced in the last 18+ months.”
“We’re opening a negative Catalyst Watch on possible narrative/sentiment overhang inhibiting multiple expansion, and the potential for reputational risk affecting new pipeline development,” analysts led by Fatima Boolani wrote in a note.
Citi noted that it’s not about the incident per se, but “the optics of a pattern.”
OKTA has thus far skirted material financial ramifications from these incidents in isolation, but the volume and close succession of headlines risks alienating customers and prospects, Citi said.
Shares are little changed year-to-date.
