Monday, June 2, 2025

OKTA stock | Buy The Dip in Okta, There’s Nothing Wrong With the Outlook

 Written by Thomas Hughes  Reviewed by Shannon Tokheim

June 2, 2025

Key Points

  • Okta had a solid quarter, but its stock price fell due to cautious guidance. The price decline is a good opportunity to load up on shares.
  • Guidance is likely to be cautious due to the strengths shown in Q1 and the hot Q2 forecast; there is potential for guidance increases this year.
  • Analysts' responses are mixed but bullish overall for this Buy-rated stock; consensus forecasts a 20% price increase from the May closing price. 
  • Five stocks to consider instead of Okta.

You would think that Okta’s NASDAQ: OKTA FQ1 earnings release was weaker than expected and compounded by poor guidance, the way its stock price fell after its release. Down more than 15% for the week, the only thing wrong with the report is a hint of caution in the full-year guidance.

The full-year guidance was only reaffirmed, despite a solid Q1 performance and hot guidance for Q2.

The outlook assumes slowing growth, which is offset by outperformance in Q1, momentum in the underlying cybersecurity business, and a high likelihood of increasing as the year progresses. 

There were some negative responses from analysts, but the takeaway from the activity is nothing but bullish. The negative revisions have reduced the high-end potential but are mainly to above-consensus price points and are offset by a higher number of price target increases. The net result is that the consensus price target is rising, up 5% in May and 16% year-over-year (YOY) at the start of June, a bullish trend compounded by increasing coverage and firming sentiment. 

The consensus sentiment for this stock is a Moderate Buy, up from last year’s Hold. The single post-release downgrade tracked by MarketBeat, from Moderate Buy to Hold, cites valuation concerns that are not reflected in the revision trend. The bulk of analysts expect this stock to rise at least 20% from the May close, leading to a high-end range of $130 to $140, a nearly 40% gain when reached. 



Okta Growth Slows; Sustains a Double-Digit Pace in 2025 and Healthy Cash Flow

Okta had a solid quarter in Q1. Although top-line growth slowed to 11.5% from last year’s nearly 20% pace, it was sufficient to outpace the consensus estimate by more than 100 basis points. The strength was driven by growth in the core subscription business, which grew by 12% year over year.

Margin news is also solid, with gross and operating margins widening compared to the prior year, driving a record profit. Critical details include the positive cash flow and $238.1 million in free cash flow, which accounts for approximately 34.6% of the revenue. 

The guidance is good despite the cautiousness in the full-year forecasts. The Q2 guide assumes another 10% YOY gain in revenue and may also be cautious due to the 14% increase in current remaining performance obligation (CRPO) and the 21% increase in RPO. Regardless, the full-year outlook also forecasts a roughly 10% gain, sufficient to sustain the company’s cash flow, business growth trajectory, and fortress balance sheet. Highlights at the end of Q1 include a 2.5% increase in shareholder equity and net debt equal to less than 0.2x equity. 

Investors Should Expect Volatility for Okta Stock Price in June

Analysts indicate Okta’s stock price as higher, an outlook supported by institutional activity; however, short interest could be a problem. The short interest wasn’t robust in the mid-May report, but it was elevated at nearly 5%, a long-term high, and had been rising over the preceding few months. With this in play, investors can expect to see short interest rise again in the following report and potentially remain elevated until later in the year.



The catalyst for short-covering will be upcoming earnings releases. 

The price action in OKTA stock is ugly. The market’s 15% decline confirms resistance at a critical level, but it may have already priced in the weakness. At $103, OKTA is still above the crucial support target near a cluster of moving averages that includes the 150-day EMA and the long-term 150-week EMA.

Assuming the market remains above that level, the rebound may begin quickly as the market reversal that began last year gains momentum. If not, this market could fall to $90 or lower before rebounding. 

Should You Invest $1,000 in Okta Right Now?

Before you consider Okta, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Okta wasn't on the list.

While Okta currently has a Moderate Buy rating among analysts, top-rated analysts believe these five stocks are better buys.

BNTX stock | 6:30 PM | 5 minute chart | Using EMA5 8 13 to determine exit point

 5 minute chart | EMA 5 8 13 | Vol vs vol 50 avg over 100% first a few hours



Yahoo finance - Volume 





FICO stock | Economic Moat

 

Economic Moat

With about 80% of Fair Isaac's profits based on the scores segment, the scores segment is the primary determinant of the firm’s overall moat rating. We believe Fair Isaac Corporation merits a wide moat rating in its scoring segment with a network effect as a moat source. Once a credit benchmark such as a FICO score gets adopted by many stakeholders (banks, investors, regulators, and consumers), it becomes difficult to displace.

In general, we believe there are two main use cases for FICO scores. The first is to make an underwriting decision for an individual loan. The second is as a benchmark for credit quality among various stakeholders such as originations, investors, analysts, and regulators.

We do not believe the underwriting use case is particularly moaty. Many lenders do not use or do not heavily weigh FICO scores for consumer lending decisions. Underwriting is a highly differentiated and often proprietary process for a lender. Capital One, for instance, differentiated itself with an “information-based strategy” that used information technology and sophisticated analytics. More recently, buy now pay later fintech Affirm in its annual report noted that, “we consider data beyond traditional credit scores, such as transaction history and credit usage, to predict repayment ability, and leverage this with real-time response data.” Upstart Holdings boasts that some of its lender partners have eliminated FICO score requirements. Furthermore, banks using their own scores can more quickly adapt when issues arise. Over time, we could see Equifax Workforce Solutions—which currently has income and employment records on over 60% of US payrolls—as becoming more important in the underwriting process. However, for lenders that do use FICO scores as part of the underwriting process, we acknowledge some switching costs exist such as having to test a new scores’ efficacy, training employees on a new scoring methodology, and integrating the new score and reason codes (Fair Isaac provides “reason codes” that explain the reasons why a consumer does not have a high credit score) into the bank’s internal system.

It is the benchmark use case that we believe gives Fair Isaac its wide moat. Even if loans are not underwritten using FICO scores, originators still use FICO scores as a way of communicating their credit quality. OneMain Holdings, which Citigroup sold in 2015, notes in its 10-K that, “while management does not utilize FICO scores to manage credit quality, we group FICO scores into the following categories for comparability purposes across our industry.” Another example of this is Toyota Motor’s auto financing unit, known as Toyota Motor Credit Corporation or TMCC. Even though TMCC originates loans using a VantageScore, in its auto finance receivables disclosures, TMCC uses FICO scores to describe its loans to investors. To this end, FICO notes that 98.8% of US securitization solely cite FICO scores as a credit measure risk.

Finally, about of one third of the scores segment revenue is from its business-to-consumer offerings. About half of the firm’s B2C revenue consists of the firm’s direct-to-consumer myFICO.com offering, whereby the firm sells FICO scores and credit monitoring directly to consumers on a website. A use case would be a consumer tracking their credit scores before applying for a mortgage. We believe FICO has strong brand awareness among consumers and that Fair Isaac has developed a brand-related intangible asset. The remaining part of the firm’s B2C revenue is with partnerships, such as its partnership with Experian. Experian switched from VantageScore to FICO in 2014 in its consumer offerings, which were struggling at the time. For example, Experian operates Experian Boost, which offers consumers a way to increase their FICO score. In the consumer channel, we believe the distribution partner can be more important than the score. For example, Credit Karma uses VantageScore for its service; we don’t view this is as being indicative that VantageScore has great brand awareness among consumers. Rather, we believe that Credit Karma’s brand and marketing overshadow the brand of any particular credit score.

The greatest competitor, in our view, of Fair Isaac is VantageScore, a joint venture among the Big Three credit bureaus (Equifax, TransUnion, and Experian) founded in 2006. As the underlying data inputs for FICO scores are from the credit bureaus, FICO scores are typically sold by the three credit bureaus. The relationship between the credit bureaus and FICO could be described as “frenemies.” Shortly after VantageScore was launched in 2006, FICO sued VantageScore on grounds that its scoring system was confusingly similar to FICO’s “300-850” range, but the courts ruled against FICO. Other times, the relationship between the credit bureaus has been more cooperative. We note that in 2014, Experian switched from VantageScore to FICO for some of its consumer offerings, which we view as a sign that FICO has greater credibility among consumers. In addition, Fair Isaac’s recent pricing increases appear to be benefiting the bureaus as they are using higher FICO score pricing to justify their own price increases.

Since its inception in 2006, VantageScore has made limited progress. Synchrony Financial made headlines with its switch from FICO to VantageScore, and we believe the rationale for the switch may have been a royalty dispute between TransUnion and Fair Isaac. We view the Synchrony win as more of a one-off than a trend. VantageScore only has 31 employees (according to PitchBook as of May 2023) and US joint-venture income reported by EFX, EXPN, and TRU is immaterial.

From an environment, social, and governance perspective, access to credit including homeownership, particularly among different demographics, is an important issue to policy makers. To this end, the Federal Housing Finance Agency, which oversees lending requirements for government conforming loans (that is Fannie Mae and Freddie Mac) has announced a transition from a “tri-merge” requirement (three credit bureau report of Equifax, Experian, and TransUnion) to a “bi-merge” requirement. In addition, the credit scores will move from FICO to both a FICO 10T and VantageScore 4.0. The credit scores will consider alternative data and trended data. Implementation, if it will occur, has been delayed and this does not seem to be a priority for the Trump administration. It is not clear whether a FICO score and a VantageScore will be required from each bureau (that is four scores in total versus two). We view the inclusion of VantageScore as a win for VantageScore. However, with FICO scores still being required, we view the moat as still being intact even if the firm takes a revenue hit from fewer scores being provided. We believe mortgage revenue is about 40% of scores revenue and about 25% of firmwide revenue. Furthermore, the timing and implementation of the bi-merge requirement has been delayed.

We note that Fair Isaac possesses aspects that are common in network effect businesses such as a winner take all dynamic (FICO generates the vast majority of credit score revenue and in the securitization market boasts a 98%-plus market share), a highly scalable business model (scores has adjusted segment operating margins of over 80%), and meaningful pricing power. We also note that credit bureau and credit score costs are relatively immaterial for lenders. For example, a mortgage credit report may cost $50-$100 with Fair Isaac receiving $15 of this. In comparison with a $300,000 mortgage loan with a closing cost of 0.5%-1.5% of the mortgage (or $1,500-$4,500), the credit report/score is a small part of the fees paid. Fair Isaac generated $706 million in scores revenue in fiscal 2022 and with over 13 billion scores produced suggests an average of about $0.05 a score. In the context of over $1 trillion in credit card debt and over $500 billion of auto loan originations per year, Fair Isaac’s fees are a small cost of the underwriting process.

Fair Isaac’s software unit generates about half of its revenue but only about one quarter of its profits. In this segment, Fair Isaac provides workflow tools for account origination, customer management, customer engagement, fraud detection, financial crimes compliance, and marketing primarily to financial institutions. Competitors include Experian, Equifax, Moody’s Meridian Link, CGI Group, Pegasystems, SAS, Adobe, Salesforce, and ACI Worldwide, IBM, Feedzai, Featurespace, and BAE Systems depending on the application. We view this segment as having a narrow moat based on switching costs. Once a software platform is installed for a certain use case, we believe that a client will face the switching costs of investing time and expense into implementing a new software platform. Additionally, firms that switch face operational risk such as operational disruption and loss of data when switching software products. We note that the firm’s dollar-based net retention rates have hovered around 105%-115% in recent years, a strong result, in our view.

FICO | Fair Isaac Earnings: Scores Segment Shines but Software Segment Slows

 

Fair Isaac Earnings: Scores Segment Shines but Software Segment Slows

Fair Isaac reported revenue growth of 15% to $499 million with Scores revenue growing 25% and software revenue growing just 2% in its fiscal second quarter. Adjusted earnings grew by 25%. The firm maintained its guidance for fiscal 2025.

Why it matters: The software segment slowed despite management optimism that it would accelerate. Also, during each of the second fiscal quarter earnings of the prior three years, the firm raised its guidance so the lack of a raise sticks out. These factors may cause a negative market reaction.

  • The firm’s revenue of $499 million in the quarter was in line with the FactSet consensus of $500 million while adjusted EBITDA of $288 million topped the consensus of $276 million.
  • Relative to consensus expectations, we believe revenue was higher in the high margin scores business but lower in the lower margin software business.

The bottom line: After digesting fiscal second quarter results, we will maintain our wide moat rating and $1,500 fair value estimate. We regard shares as pricey at current levels.

  • While the firm’s software revenues were below our expectations, the software segment is only about 20% of Fair Isaac’s profits and the firm’s non-mortgage score revenue came in slightly ahead of our model.

Key stats: Scores revenue grew 25% with business to business up 31% and business to consumer up 6%. Mortgage originations grew 48% driven by pricing as Equifax’s credit inquiries declined 10%. Auto revenue was up 16% though management declined the break-out the price versus volume mix.

  • Software revenue was up just 2%, which compares to 8% growth in the first quarter. Dollar based net retention slowed to 102% from 105% and annualized recurring revenue decelerated to 3% from 6% sequentially.
  • Amidst a volatile macroeconomic backdrop, Fair Isaac continues to see lower usage level impact some software revenue. While new bookings in the quarter were strong, management did acknowledge it can take longer to close deals in this environment.

FICO | Notes

 

Fair Isaac: Stock Slip Appears To Be Fueled by FHFA Director's Comments

Fair Isaac's shares fell 8% on Tuesday, May 20, and are down an additional 15%-plus a day later, leaving the stock down just over 20% since Monday's close. Equifax is also down more than 5% from Monday's close, as is TransUnion.

Why it matters: Compared with just a 1% decline in the Morningstar US Market Index since Monday's close, the drop in Fair Isaac's share price is notable. The catalyst appears to be recent comments by Bill Pulte, the director of the Federal Housing Finance Agency, or FHFA, about making FICO scores as “economical as possible.”

  • This isn't the first time that concerns about Fair Isaac's pricing by government officials have affected the stock price. Missouri Sen. Josh Hawley's March 2024 comments about the firm resulted in a 6% decline in Fair Isaac's stock price.
  • According to industry trade publication HousingWire, Pulte said the agency is actively looking at moving from the mandatory tri-merge for FHFA mortgages to an optional bi-merge. This marks a departure from the position of Republican senators like South Carolina's Tim Scott, who have opposed a move away from the mandatory tri-merge for FHFA mortgages.

Long view: Fair Isaac's valuation of 76 times fiscal 2025 adjusted consensus earnings (provided by FactSet) left little room for error, in our view. Overall, though, we expect to maintain our $1,600 per share fair value estimate on the firm and regard shares as slightly pricey at current levels, even with the sell-off so far this week.

  • We maintain our wide moat rating. We believe that Fair Isaac's moat stems from a network effect and that FHFA's authority to limit Fair Isaac's pricing is limited. We also believe that switching to a new score would require coordination among different stakeholders and would be costly.
  • We continue to find shares of TransUnion attractive and note that among TransUnion, Equifax, and Fair Isaac, the company has the smallest exposure to the US mortgage market.

Experian

 Experian plc is a multinational data broker and consumer credit reporting company headquartered in Dublin, Ireland. Experian collects and aggregates information on more than 1 billion people and businesses including 235 million individual U.S. consumers and more than 25 million U.S. businesses.[7][8] It is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index. Experian is a partner in USPS address validation. It is one of the "Big Three" credit-reporting agencies, alongside TransUnion and Equifax.[9]

In addition to its credit services, Experian also sells decision analytic and marketing assistance to businesses, including individual fingerprinting and targeting.[10] Its consumer services include online access to credit history and products meant to protect from fraud and identity theft.[11] Like all credit reporting agencies, the company is required by U.S. law to provide consumers with one free credit report every year.[12]

History

[edit]

The company has its origins in Credit Data Corporation, a business which was acquired by TRW Inc. in 1968,[13] and subsequently renamed TRW Information Systems and Services Inc.[14]

In November 1996, TRW sold the unit, as Experian, to Bain Capital and Thomas H. Lee Partners.[15] Just one month later, the two firms sold Experian to The Great Universal Stores Limited in Manchester, England, a retail conglomerate with millions of customers paying for goods on credit (later renamed GUS).[16] GUS merged its own credit-information business, CCN, which at the time was the largest credit-service company in the UK, into Experian.[17]

In October 2006, Experian was demerged from GUS and listed on the London Stock Exchange.[18][19]

In August 2005, Experian accepted a settlement with the Federal Trade Commission (FTC) over charges that Experian had violated a previous settlement with the FTC. The FTC alleged that ads for the "free credit report" did not adequately disclose that Experian customers would automatically be enrolled in Experian's $79.95 credit-monitoring program.[20][Note 1]

In January 2008, Experian announced that it would cut more than 200 jobs at its Nottingham office.[21]

Experian shut down its Canadian operations on 14 April 2009.[22]

In March 2017, the U.S. Consumer Financial Protection Bureau fined Experian $3 million for providing invalid credit scores to consumers.[23]

In October 2017, Experian acquired Clarity Services, a credit bureau specialising in alternative consumer data.[24]

In October 2024, Experian agreed to acquire Brazilian digital fraud prevention provider ClearSale for $350 million.[25]

Cathie Wood buys $13.9 million of popular AI stock | Tem stock

 Cathie Wood, head of Ark Investment Management, often buys her favorite tech stocks when prices dip.

This is what she did in late May, adding shares of a popular AI company after a pullback.

Wood’s funds saw a brief bump after Trump won the presidency last November, but that momentum didn’t go far. Her flagship Ark Innovation ETF  (ARKK)  underperformed the S&P 500 index amid broader market volatility this year.

Year-to-date, ARKK is down 2.15%, while the S&P 500 index is up 0.51%.

Wood gained a remarkable 153% in 2020, which helped build her reputation and attract loyal investors. Still, her long-term performance has made many others skeptical of her aggressive style.

As of May 30, Ark Innovation ETF, with $5 billion under management, has delivered a five-year annualized return of negative 1.66%. In comparison, the S&P 500 has an annualized return of 15.94% over the same period.

Cathie Wood’s investment strategy explained

Wood’s investment strategy is straightforward: Her Ark ETFs typically buy shares in emerging high-tech companies in fields such as artificial intelligence, blockchain, biomedical technology, and robotics.

Wood says these companies have the potential to reshape industries, but their volatility leads to major fluctuations in Ark funds' values.

The Ark Innovation ETF wiped out $7 billion in investor wealth over the 10 years ending in 2024, according to an analysis by Morningstar’s analyst Amy Arnott. That made it the third-biggest wealth destroyer among mutual funds and ETFs in Arnott’s ranking.

Wood recently said the U.S. is coming out of a three-year “rolling recession” and heading into a productivity-led recovery that could trigger a broader bull market.

In a letter to investors published last month, she dismissed recession predictions as she expects "more clarity on tariffs, taxes, regulations, and interest rates over the next three to six months."

"If the current tariff turmoil results in freer trade, as tariffs and non-tariff barriers come down in tandem with declines in other taxes, regulations, and interest rates, then real GDP growth and productivity should surprise on the high side of expectations at some point during the second half of this year," she wrote.

She also struck an optimistic tone for tech stocks.

"During the current turbulent transition in the U.S., we think consumers and businesses are likely to accelerate the shift to technologically enabled innovation platforms including artificial intelligence, robotics, energy storage, blockchain technology, and multiomics sequencing," she said.

But not everyone shares Wood’s bullish outlook. Her flagship Ark Innovation ETF has seen $2.02 billion in net outflows over the past year through May 29, including nearly $144 million in the last month alone, according to ETF research firm VettaFi.

Cathie Wood bought $13.9 million of Tempus AI stock

On May 28, Wood’s Ark funds bought 251,080 shares of Tempus AI  (TEM) . That chunk of stock was valued at roughly $13.9 million as of May 30’s close.

Wood has been actively buying Tempus AI’s stock since last June's IPO. Former Speaker of the House Nancy Pelosi also bets on this stock. In January, Pelosi bought 50 call options (a bet that a stock will rise) for Tempus AI valued at least $50,000.

Tempus AI is a health technology company founded in 2015. It uses AI for diagnostics and helps physicians make personalized, data-driven decisions.

The stock plunged more than 19% on May 28 after short-seller Spruce Point Capital Management released a report raising concerns about management’s alleged history of promoting disruptive technology companies with revenue recognition issues and shareholder losses.

The report also questioned the validity of Tempus AI’s artificial intelligence services, citing minimal revenues and product demonstrations.

Tempus AI responded that the report is "riddled with hypotheticals and inaccuracies and fails to address Tempus’ history of strong financial performance and impressive growth."

Wood's team said it has investigated the credibility of these allegations. The team believes that Tempus AI "remains focused on delivering data-driven, AI-enabled, patient-centered diagnostics and improving outcomes through precision medicine," according to a weekly letter to investors.

Despite that tumble, Tempus AI stock has surged 63% year-to-date.

On May 6, the company reported first-quarter results, with revenue climbing 75.4% year-over-year to $255.7 million. Gross profit surged 99.8% to $155.2 million, driven by continued margin gains in its Genomics and Data and Services segments.

It raised its full-year 2025 revenue forecast to $1.25 billion, reflecting roughly 80% growth from the previous year. However, the company is still not profitable, and net loss for the quarter widened to $68 million from $64.7 million.

Wood says health care is the "most underappreciated application of AI."

“We’ve got 37 trillion cells in our body, and they’re going to be sequenced as we’re looking for cures,” Wood told CNBC in February.

“I think the most underappreciated application of AI is health care. I think health care is responsible for an incredible amount of storage out there right now. Data is the name of the game.”

Fund manager buys and sells

As of May 31, Tempus AI ranked sixth among Ark Innovation ETF’s holdings, accounting for 5.1% of the portfolio with a market value of $284.8 million.

Wood's latest trades this week also include buying shares of Nvidia  (NVDA) , Advanced Micro Devices  (AMD) , Iridium Communications  (IRDM) , Intuitive Machines  (LUNR) , and Intellia Therapeutics  (NTLA) . At the same time, she trimmed positions in Tesla  (TSLA) , Roblox  (RBLX) , and CoreWeave  (CRWV) .

Silin Chen is a stocks and markets news writer for TheStreet. She has experience with the Financial Times and holds a Master’s Degree from New York University’s Business and Economic Reporting program.

Big Pharma Firms Make Deals

 

Big Pharma Firms Make Deals

Sanofi (SNY) will buy Blueprint Medicines for $9.1 billion, or $129 a share cash. Blueprint shareholders also will receive one non-tradeable contingent value right with potential milestone payments of $2 and $4.

Blueprint Medicines stock shot up more than 26% to above 128. Sanofi stock edged lower.

Bristol-Myers Squibb (BMY) will pay $1.5 billion upfront to BioNTech (BNTX) with up to $2 billion in milestone payments for the right to develop and commercialize cancer drug BNT327.

Bristol-Myers stock rose 1.2%. BioNTech stock jumped 13%.

Options Volatility and Implied Earnings Moves This Week, June 02 – June 06, 2025

 Note that options volatility tends to be high in the days leading up to an earnings announcement, due to uncertainty around the earnings. Investors don’t know whether the earnings will be positive or negative, so the price of options (aka the option premium) rises.

Furthermore, after the earnings announcement, because the uncertainty has been resolved, the price of options (the option premium) decreases substantially. This is known as the volatility crush.

Here are the major companies reporting this week and their expected earnings moves. Click on any ticker to see additional data about options on the stock, including real-time expected earnings moves, prices, volume, and open interest.

Monday, June 02, 2025

CPB: +/- 5.49%
CRDO: +/- 19.85%

Tuesday, June 03, 2025

DG: +/- 9.29%
SIG: +/- 12.69%
HQY: +/- 9.94%
OLLI: +/- 11.26%
HPE: +/- 9.32%
YEXT: +/- 16.10%
NIO: +/- 9.89%
CRWD: +/- 7.67%
ASAN: +/- 15.63%

Wednesday, June 04, 2025

DLTR: +/- 9.97%
PVH: +/- 11.09%
THO: +/- 11.11%
FIVE: +/- 12.40%
MDB: +/- 14.87%
CHPT: +/- 34.53%
BARK: +/- 23.26%
PL: +/- 18.75%

Thursday, June 05, 2025

AVGO: +/- 7.80%
CIEN: +/- 11.87%
CBRL: +/- 11.84%
LULU: +/- 9.82%
MOMO: +/- 12.19%
DOCU: +/- 10.39%
WOOF: +/- 23.43%
BRZE: +/- 16.22%
IOT: +/- 14.25%
RBRK: +/- 20.40%

Friday, June 06, 2025

FCEL: +/- 12.33%