Okta Inc . (NASDAQ:OKTA) shares have declined by 3.5% in pre-market trading amid analyst comments that a potential breach of the identity verification company's system might lead to disruptions in near-term sales.
On Friday, October 20th, Okta detected a security breach where an adversary gained unauthorized access to their support case management system using stolen credentials.
This breach allowed the threat actor to view files uploaded by specific Okta customers in recent support cases. On a more positive note, Okta emphasized that the support case management system is distinct from Okta's primary operational services, which remain unaffected.
Analysts from Evercore ISI remind investors this is the second major breach in the last two years.
“These events will most likely have a [near-term] impact on OKTA’s pipelines, potentially forcing a downward revision to FY24 estimates and jeopardizing consensus estimates for FY25,” the analysts said.
They added Okta to the broker’s Tactical Underperform List.
“In our first tranche of C3Q cyber checks last week (included discussions with Infosys (NS:INFY) & SHI) in conjunction with all the recent headlines will likely create a much more choppier and unpredictable deal environment into year end,” they added.
Citi analysts also opened a downside 90-day catalyst watch on OKTA stock, citing “possible narrative/sentiment overhang inhibiting multiple expansion, and the potential for reputational risk affecting new pipeline development, platform expansion activity, and churn/retention dynamics.”