Analyst Calls For "Epic 10-Bagger" Returns for Okta Stock

OKTA scored a resoundingly bullish nod from Canaccord Genuity today

by Patrick Martin

Published on Apr 23, 2018 at 11:45 AM
Updated on Jun 24, 2020 at 10:16 AM

Online security name Okta Inc (NASDAQ: OKTA) is higher today, up 4.9% to trade at $44.04 -- and earlier touched a record high of $44.30 -- after receiving an upgrade to "buy" from "hold" at Canaccord Genuity, as well as a price-target hike to $50 from $36. The analyst in coverage said the company's growth rate will likely "not decay as fast as investors expect," setting the stage for "an epic 10-bagger stock price return" over the long haul.

Okta stock has carved out a channel of higher highs since the start of the year, adding nearly 72% so far in 2018. The shares have been guided higher by their ascending 30-day moving average since mid-January, and are now trading at more than 2.5 times their April 2017 IPO price of $17.

OKTA Chart Intraday

Should Okta stock keep climbing, it could send shorts scurrying. Despite the equity's strong start to the year, short interest has only continued to rise, increasing by 10.8% during the two most recent reporting periods to a record high of 5.8 million shares. This represents 15.2% of the stock's total available float.

The security has seen plenty of pessimism in the options pits, too. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the 10-day put/call volume ratio of 2.93 indicates puts bought to open have outnumbered calls by nearly 3-to-1.

Digging deeper, OKTA's May 35 put has registered the biggest increase to open interest during this time frame, adding 4,895 contracts in the past two weeks. Most of that open interest build occurred just last Wednesday, April 18, when ISE/CBOE/PHLX data shows 4,400 puts were bought to open at this out-of-the-money strike.

For prospective call buyers betting that the heavy-handed pessimism toward OKTA will unwind to push the stock higher, the good news is that short-term options are a relative steal. The security's Schaeffer's Volatility Index (SVI) of 47% arrives in just the 11th annual percentile, indicating that lower-than-usual volatility expectations are being priced into front-month options right now.


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