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Okta and Aviat Networks have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – September 25, 2024 – Zacks Equity Research shares Okta (OKTA - Free Report) as the Bull of the Day and Aviat Networks (AVNW - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Vistra Corp.'s (VST - Free Report) , NVIDIA Corp. (NVDA - Free Report) and Advanced Micro Devices, Inc. (AMD - Free Report) .
Okta, a $13 billion provider of identity security solutions, is back to the upper realms of the Zacks Rank after EPS estimates turned back north this month.
What's odd is that the stock price is still in the cellar after their late August earnings report saw shares drop over 17% on the day of, and then over -25% total to Sep 10.
The problem is that Wall Street is still nervous about the company's business outlook after they had to pay $60 million to settle a data breach from two years ago.
Among 34 analysts, the average price target is above $105 and the low PT is $75.
And large institutions were big net buyers of OKTA shares in Q2.
It's almost as if everyone is waiting for more bad news as the stock sits here at $76.
So I bought some. I'm obviously looking for the "contrarian upside" to good news the stock is not being discounted for. Here's what I told my TAZR members yesterday...
TAZR Traders
Portfolio is buying Okta between $74 and $76.
I just went over the numbers and outlook. Unless somebody knows that another internal OKTA security breach is going to drop, or they are losing customers because of the way they handled the last one, I think the stock is cheap relative to all cybersecurity peers.
It's back to a Zacks #1 Rank for a reason and I don't see the worry here at $13 billion, trading under 5X sales.
In the last few weeks since the company report, the Zacks consensus EPS estimate for this fiscal 2025 (ends in January) rose 7% from $2.40 to $2.57, representing a 29X P/E in an industry loaded with 90X P/Es.
(end of TAZR Buy Alert excerpt)
Why I Think OKTA Has a Bright Future
Besides that fact that the company specializes in "identity security," in essence making sure that the person authorized for an IT function is the one being authenticated and monitored, they are also aggressively pursuing the edges of new AI threat vectors.
Yesterday, they rolled out an expansion of an existing service, Auth0, to attract more corporate clients as the threat landscape evolves. Traditional identity threats, bolstered by AI advances, are enabling low-quality, high-intensity attacks to become more dangerous and helping new, personalized attacks to emerge.
With bots making up nearly 50% of all internet traffic, developers are challenged with securing their applications in this landscape. Multi-factor authentication (MFA), with possession-based or biometric factors, remains as one of the most effective defenses.
Conversely, AI can also power bot detection, with AI helping Okta block 79% of automated login attempts and recently reduce bot traffic by 90% over a 90 day period.
Auth0 Takes "Free for Developers" to a New Level with More Users, More Security, Free MFA & Passwordless
SAN FRANCISCO--(BUSINESS WIRE)--Sep. 24, 2024-- Okta, Inc. (NASDAQ:OKTA), the leading independent Identity partner, today announced that it's expanding the capabilities of Auth0 and the Okta Customer Identity Cloud to give developers more of the scalability, security, and customization they need. These enhancements start with the Auth0 Free Plan, including an increase to 25,000 monthly active users (MAUs), passwordless, unlimited* social & Okta connections, and custom domain support.
"Developers are grappling with greater demand to rapidly deploy applications while facing increasingly sophisticated AI-powered bot attacks to defend against," said Shiven Ramji, President, Customer Identity Cloud at Okta. "To help them stay ahead of these threats and grow their businesses, developers require solutions that can take care of identity and security for them. By making more Auth0 capabilities available at no added cost, developers can build secure apps from the start and feel confident in their ability to scale alongside significant user growth."
What I like about the OKTA approach here is the same thing that made me a dedicated NVIDIA investor many years ago: they give powerful tools to developers who can then build new solutions for their clients within that ecosystem.
The world of cybersecurity took a turn in this decade where the "hackers" are no longer in their pajamas in their parents' basement. Now they are well-funded and equipped by state enterprises from North Korea, Iran, and Russia.
That's why I wrote a special report last October titled "State of Threat: Cyber Crime 3.0" where I detailed the new levels of sophistication, especially with AI applications.
If you want a copy of that report, just email Ultimate@Zacks.com and tell 'em Cooker sent you.
Bottom line: Ransomware costs are expected to soar at a 30% CAGR from $35B in 2023 to $220B by 2030. You don't have to buy OKTA, but you better own at least 3 cyber firms since the enterprises needing extensive protection usually employ 5+ of them to cover all bases.
Among the tech sector, one stock that could surprise investors in terms of more downside risk is Aviat Networks. While Aviat's growth and valuation may be attractive on the surface, the global supplier of wireless network solutions has been entrenched in scrutiny.
Considering such, it may be best to avoid Aviat's stock at the moment which lands a Zacks Rank #5 (Strong Sell) and the Bear of the Day.
Aviat is Losing Investor Confidence
Investor confidence in Aviat's stock has started to sour following legal investigations by multiple law firms. Earlier in the month, Aviat stated it wouldn't be able to timely file its annual report after identifying certain errors impacting previously reported financial information for its current fiscal 2024 and FY23.
News of such has caused Aviat's stock to plummet -17% in September. Furthermore, AVNW is now down more than -30% year to date to vastly underperform the broader indexes and its Zacks Wireless Equipment Market's +25%.
Negative Zacks ESP
On top of mounting concerns in regard to accounting practices, the Zacks ESP (Expected Surprise Prediction) also indicates Aviat could miss its fiscal fourth quarter earnings expectations with the company scheduled to report on Wednesday, September 25.
To that point, the Most Accurate Estimate for Aviat's Q4 EPS is at $0.62 and -6% below the Zacks Consensus of $0.66 per share.
Declining EPS Revisions
Notably, Aviat's Q4 earnings estimate revisions have declined -16% from estimates of $0.79 per share 30 days ago. In the last month annual earnings estimates for FY24 and FY25 have declined -4% and -7% respectively.
Final Thoughts
Unfortunately, the old saying of when there is smoke there's fire may apply to Aviat's stock. Considering the wireless network provider is dealing with financial accounting probes, declining earnings estimate revisions is another tell-tale sign that it may be best to avoid Aviat's stock at the moment.
Additional content:
Vistra Surpasses NVIDIA as S&P 500's Top Stock in 2024: Buy Now?
This year, Vistra Corp.'s strong rally could potentially hinder NVIDIA Corp. from becoming the S&P 500's top annual performer back to back, a title held only by Advanced Micro Devices, Inc. since 1999.
However, Vistra's stupendous gains have made the stock pricey. So, let's look at how to trade the VST stock.
Vistra (Not NVIDIA) is the S&P 500's Top YTD Gainer
Wall Street darling NVIDIA squashed bubble fears and witnessed a meteoric rise this year with the arrival of artificial intelligence (AI).
Shipment of the much-awaited next-generation Blackwell chips by the end of the year and sheer dominance in the graphic processing units (GPU) market has given the magnificent 7 stock an edge over its peers.
Most importantly, NVIDIA stock got a boost from the Federal Reserve's major interest rate cuts. Lower interest rates don't affect NVIDIA's crucial cash flows for growth. Also, lower borrowing costs boost its profit margins (read more: Post-Fed Rate Cut: Buy, Hold, or Sell NVIDIA Stock?).
As a result, NVIDIA's shares have soared 134.8% this year and remained the S&P 500's top performer for quite some time. However, Vistra, a not-so-household name, toppled NVIDIA last week to become the best-performing stock in the S&P 500, an index it joined not long ago.
The change in the top position took place as investors showed keen interest in an electric company rather than semiconductor stocks to play the boom in AI.
Vistra shares scaled upward for its nuclear power business and high demand from power-consuming AI data centers. Vistra is poised to capitalize on AI data center power needs with its exclusive gas and nuclear power plants mix.
The Vistra stock climbed 189.8% year to date, while its peers trailed, with the Utility - Electric Power industry soaring 17.2%.
Key VST Stock Tailwinds
It's just not power requirements for data centers that are propelling Vistra shares upward. According to analyst Julien Dumoulin-Smith of Jefferies, Vistra stands to gain from an increase in power prices, increased plant usage and likely contracts with data centers. Hence, the $4.78 Zacks Consensus Estimate for VST's earnings per share is up 8.9% year over year.
Vistra has also generated profits significantly, which boosted its share price. After all, the VST stock has a return on equity (ROE) of 21.1%, more than the industry's 10.4%. Any ROE above 20% is considered to be very strong.
Time to Buy VST Stock?
Banking on the AI boom, increase in wholesale power prices and potential to generate profits competently not only helped Vistra to be the top performer in the S&P 500 but also will boost its shares further. Anyhow, the VST stock is trading above the 200-day moving average this year, indicating a long-term uptrend.
Prominent brokers have also increased the average short-term price target of VST by 6.6% from the stock's last closing price of $107.88. The highest price target is at $133, an upside of 23.3%.
Thus, those who have invested in the VST stock should stick to it and capitalize on the strong price upside trend. But if you are thinking of buying the stock now, it may burn a hole in your pocket! This is because, per price/earnings, the VST stock, presently, trades at 23.3X forward earnings. However, the industry's forward earnings multiple is 17.4X. So, better wait for an opportune moment to invest in the VST stock.
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Okta and Aviat Networks have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – September 25, 2024 – Zacks Equity Research shares Okta (OKTA - Free Report) as the Bull of the Day and Aviat Networks (AVNW - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Vistra Corp.'s (VST - Free Report) , NVIDIA Corp. (NVDA - Free Report) and Advanced Micro Devices, Inc. (AMD - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Okta, a $13 billion provider of identity security solutions, is back to the upper realms of the Zacks Rank after EPS estimates turned back north this month.
What's odd is that the stock price is still in the cellar after their late August earnings report saw shares drop over 17% on the day of, and then over -25% total to Sep 10.
The problem is that Wall Street is still nervous about the company's business outlook after they had to pay $60 million to settle a data breach from two years ago.
Among 34 analysts, the average price target is above $105 and the low PT is $75.
And large institutions were big net buyers of OKTA shares in Q2.
It's almost as if everyone is waiting for more bad news as the stock sits here at $76.
So I bought some. I'm obviously looking for the "contrarian upside" to good news the stock is not being discounted for. Here's what I told my TAZR members yesterday...
TAZR Traders
Portfolio is buying Okta between $74 and $76.
I just went over the numbers and outlook. Unless somebody knows that another internal OKTA security breach is going to drop, or they are losing customers because of the way they handled the last one, I think the stock is cheap relative to all cybersecurity peers.
It's back to a Zacks #1 Rank for a reason and I don't see the worry here at $13 billion, trading under 5X sales.
In the last few weeks since the company report, the Zacks consensus EPS estimate for this fiscal 2025 (ends in January) rose 7% from $2.40 to $2.57, representing a 29X P/E in an industry loaded with 90X P/Es.
(end of TAZR Buy Alert excerpt)
Why I Think OKTA Has a Bright Future
Besides that fact that the company specializes in "identity security," in essence making sure that the person authorized for an IT function is the one being authenticated and monitored, they are also aggressively pursuing the edges of new AI threat vectors.
Yesterday, they rolled out an expansion of an existing service, Auth0, to attract more corporate clients as the threat landscape evolves. Traditional identity threats, bolstered by AI advances, are enabling low-quality, high-intensity attacks to become more dangerous and helping new, personalized attacks to emerge.
With bots making up nearly 50% of all internet traffic, developers are challenged with securing their applications in this landscape. Multi-factor authentication (MFA), with possession-based or biometric factors, remains as one of the most effective defenses.
Conversely, AI can also power bot detection, with AI helping Okta block 79% of automated login attempts and recently reduce bot traffic by 90% over a 90 day period.
Auth0 Takes "Free for Developers" to a New Level with More Users, More Security, Free MFA & Passwordless
SAN FRANCISCO--(BUSINESS WIRE)--Sep. 24, 2024-- Okta, Inc. (NASDAQ:OKTA), the leading independent Identity partner, today announced that it's expanding the capabilities of Auth0 and the Okta Customer Identity Cloud to give developers more of the scalability, security, and customization they need. These enhancements start with the Auth0 Free Plan, including an increase to 25,000 monthly active users (MAUs), passwordless, unlimited* social & Okta connections, and custom domain support.
"Developers are grappling with greater demand to rapidly deploy applications while facing increasingly sophisticated AI-powered bot attacks to defend against," said Shiven Ramji, President, Customer Identity Cloud at Okta. "To help them stay ahead of these threats and grow their businesses, developers require solutions that can take care of identity and security for them. By making more Auth0 capabilities available at no added cost, developers can build secure apps from the start and feel confident in their ability to scale alongside significant user growth."
What I like about the OKTA approach here is the same thing that made me a dedicated NVIDIA investor many years ago: they give powerful tools to developers who can then build new solutions for their clients within that ecosystem.
The world of cybersecurity took a turn in this decade where the "hackers" are no longer in their pajamas in their parents' basement. Now they are well-funded and equipped by state enterprises from North Korea, Iran, and Russia.
That's why I wrote a special report last October titled "State of Threat: Cyber Crime 3.0" where I detailed the new levels of sophistication, especially with AI applications.
If you want a copy of that report, just email Ultimate@Zacks.com and tell 'em Cooker sent you.
Bottom line: Ransomware costs are expected to soar at a 30% CAGR from $35B in 2023 to $220B by 2030. You don't have to buy OKTA, but you better own at least 3 cyber firms since the enterprises needing extensive protection usually employ 5+ of them to cover all bases.
Bear of the Day:
Among the tech sector, one stock that could surprise investors in terms of more downside risk is Aviat Networks. While Aviat's growth and valuation may be attractive on the surface, the global supplier of wireless network solutions has been entrenched in scrutiny.
Considering such, it may be best to avoid Aviat's stock at the moment which lands a Zacks Rank #5 (Strong Sell) and the Bear of the Day.
Aviat is Losing Investor Confidence
Investor confidence in Aviat's stock has started to sour following legal investigations by multiple law firms. Earlier in the month, Aviat stated it wouldn't be able to timely file its annual report after identifying certain errors impacting previously reported financial information for its current fiscal 2024 and FY23.
News of such has caused Aviat's stock to plummet -17% in September. Furthermore, AVNW is now down more than -30% year to date to vastly underperform the broader indexes and its Zacks Wireless Equipment Market's +25%.
Negative Zacks ESP
On top of mounting concerns in regard to accounting practices, the Zacks ESP (Expected Surprise Prediction) also indicates Aviat could miss its fiscal fourth quarter earnings expectations with the company scheduled to report on Wednesday, September 25.
To that point, the Most Accurate Estimate for Aviat's Q4 EPS is at $0.62 and -6% below the Zacks Consensus of $0.66 per share.
Declining EPS Revisions
Notably, Aviat's Q4 earnings estimate revisions have declined -16% from estimates of $0.79 per share 30 days ago. In the last month annual earnings estimates for FY24 and FY25 have declined -4% and -7% respectively.
Final Thoughts
Unfortunately, the old saying of when there is smoke there's fire may apply to Aviat's stock. Considering the wireless network provider is dealing with financial accounting probes, declining earnings estimate revisions is another tell-tale sign that it may be best to avoid Aviat's stock at the moment.
Additional content:
Vistra Surpasses NVIDIA as S&P 500's Top Stock in 2024: Buy Now?
This year, Vistra Corp.'s strong rally could potentially hinder NVIDIA Corp. from becoming the S&P 500's top annual performer back to back, a title held only by Advanced Micro Devices, Inc. since 1999.
However, Vistra's stupendous gains have made the stock pricey. So, let's look at how to trade the VST stock.
Vistra (Not NVIDIA) is the S&P 500's Top YTD Gainer
Wall Street darling NVIDIA squashed bubble fears and witnessed a meteoric rise this year with the arrival of artificial intelligence (AI).
Shipment of the much-awaited next-generation Blackwell chips by the end of the year and sheer dominance in the graphic processing units (GPU) market has given the magnificent 7 stock an edge over its peers.
Most importantly, NVIDIA stock got a boost from the Federal Reserve's major interest rate cuts. Lower interest rates don't affect NVIDIA's crucial cash flows for growth. Also, lower borrowing costs boost its profit margins (read more: Post-Fed Rate Cut: Buy, Hold, or Sell NVIDIA Stock?).
As a result, NVIDIA's shares have soared 134.8% this year and remained the S&P 500's top performer for quite some time. However, Vistra, a not-so-household name, toppled NVIDIA last week to become the best-performing stock in the S&P 500, an index it joined not long ago.
The change in the top position took place as investors showed keen interest in an electric company rather than semiconductor stocks to play the boom in AI.
Vistra shares scaled upward for its nuclear power business and high demand from power-consuming AI data centers. Vistra is poised to capitalize on AI data center power needs with its exclusive gas and nuclear power plants mix.
The Vistra stock climbed 189.8% year to date, while its peers trailed, with the Utility - Electric Power industry soaring 17.2%.
Key VST Stock Tailwinds
It's just not power requirements for data centers that are propelling Vistra shares upward. According to analyst Julien Dumoulin-Smith of Jefferies, Vistra stands to gain from an increase in power prices, increased plant usage and likely contracts with data centers. Hence, the $4.78 Zacks Consensus Estimate for VST's earnings per share is up 8.9% year over year.
Vistra has also generated profits significantly, which boosted its share price. After all, the VST stock has a return on equity (ROE) of 21.1%, more than the industry's 10.4%. Any ROE above 20% is considered to be very strong.
Time to Buy VST Stock?
Banking on the AI boom, increase in wholesale power prices and potential to generate profits competently not only helped Vistra to be the top performer in the S&P 500 but also will boost its shares further. Anyhow, the VST stock is trading above the 200-day moving average this year, indicating a long-term uptrend.
Prominent brokers have also increased the average short-term price target of VST by 6.6% from the stock's last closing price of $107.88. The highest price target is at $133, an upside of 23.3%.
Thus, those who have invested in the VST stock should stick to it and capitalize on the strong price upside trend. But if you are thinking of buying the stock now, it may burn a hole in your pocket! This is because, per price/earnings, the VST stock, presently, trades at 23.3X forward earnings. However, the industry's forward earnings multiple is 17.4X. So, better wait for an opportune moment to invest in the VST stock.
Vistra currently has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.