Okta (OKTA) investors agreed that cyber could see acceleration from increased AI safety concerns, with platforms best positioned to capture that market opportunity, but valuations remain stretched and incremental investors await pullbacks on platforms, Morgan Stanley said Tuesday.
According to the note, its analysis suggests acceleration in both share gains and market growth is already priced into the stocks, hence there is limited room for upside in current platform valuations. Morgan Stanley expects a combination of reluctant stragglers and squeezing of shorts to drive moves from here.
Okta is generally seen as a secular winner from its Agentic Identity exposure, with investors questioning how quickly the acceleration can take place because of the agentic opportunity, the note said.
Investors were receptive to Morgan Stanley's analysis of three potential scenarios of cyber spend in coming years, namely, Status Quo, Accelerated Spend in Catch-up, and Cyber Unable to Catch Breaches.
The brokerage found that those not involved in cyber tend to believe the bear case that a bigger breach could occur that cyber vendors would be unlikely to catch.
Morgan Stanley kept an overweight rating on Okta and raised its price target to $245 from $200.
Price: 202.41, Change: +0.23, Percent Change: +0.11