UBS prefers Zscaler over Okta ahead of Q1 earnings

On Thursday, shares of Zscaler (NASDAQ:ZS) and Okta (NASDAQ:OKTA) remained in focus as UBS analysts maintained a Buy rating on both stocks ahead of their April quarter earnings reports scheduled for next week. Okta, currently valued at $21.8 billion, has demonstrated impressive financial performance with a 76% gross profit margin and 15% revenue growth over the last twelve months. Despite both stocks having experienced significant increases, with Zscaler and Okta rising 28% and 32% respectively since April 21, compared to the 22% and 10% gains of the IGV (iShares Expanded Tech-Software Sector ETF) and BUG (Global X Cybersecurity ETF), UBS expressed a preference for Zscaler’s position going into the earnings announcement. According to InvestingPro, 30 analysts have revised their earnings upwards for Okta’s upcoming period, suggesting strong confidence in the company’s near-term prospects.

The firm’s channel checks, which assess the performance and prospects of companies through their distribution channels, revealed positive sentiments towards Zscaler and slightly positive views on Okta. These checks also indicated a more mixed reception for SentinelOne (NYSE:S), another cybersecurity company set to report earnings next week. Okta’s stock is currently trading near its 52-week high of $127.57, with a remarkable 59% gain over the past six months.Discover more valuable insights about Okta and other cybersecurity stocks with InvestingPro, which offers comprehensive analysis through Pro Research Reports covering 1,400+ top US stocks.

UBS’s note to clients highlighted the crowded nature of Zscaler and Okta positions, as both companies have drawn significant attention from investors in recent weeks. This attention is reflected in the substantial stock price increases leading up to the earnings release.

The analysts elaborated on their findings from recent partner checks, which suggested some incremental caution in the cybersecurity sector during April and early May. Despite this caution, UBS’s stance on Zscaler is notably more favorable than on Okta, indicating a stronger confidence in Zscaler’s upcoming financial results.

Investors and market watchers are now awaiting the April quarter earnings reports of Zscaler, Okta, and SentinelOne to see if the companies’ performances align with the expectations set by the market and the insights provided by UBS analysts. Okta’s earnings report is scheduled for May 27, with analysts projecting continued profitability for the current fiscal year.

In other recent news, Okta, Inc. is attracting attention with several notable developments. Cantor Fitzgerald has maintained an Overweight rating on Okta, setting a price target of $130 and projecting first-quarter fiscal year 2026 revenue to reach $680.1 million, slightly above Okta’s guidance. Guggenheim has raised its price target for Okta to $140, citing expectations that the company will surpass first-quarter consensus subscription and total revenue estimates. KeyBanc Capital Markets has increased its price target to $155, highlighting Okta’s strong positioning in the identity management sector and its potential for enhanced go-to-market execution.

Additionally, DA Davidson has lifted its price target to $145, maintaining a Buy rating and expressing confidence in Okta’s ability to exceed its fiscal year 2026 guidance. RBC Capital Markets has also raised its price target for Okta, noting a favorable risk/reward scenario ahead of earnings and positive long-term trends in the identity market. Analysts from these firms remain optimistic about Okta’s prospects, despite broader challenges in the cybersecurity industry. These developments reflect a general belief in Okta’s continued growth and strategic positioning in the market.

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