EarningsBeats.com Digest

Published: Wed, 05/27/20

EarningsBeats.com Digest for May 27, 2020

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A Strong Stock in a Very Strong Sector - The Best of the Best

I always say that if I am going to hold a stock into its earnings report, it will be the "best of the best" type of stock, or best of breed. That's exactly what Okta, Inc. (OKTA) is. As good as the software group ($DJUSSW) has been for years, OKTA has been an outperformer in the group. 2020 has been no different as OKTA had more than doubled since its March 16th low - that is until the big reversal occurred on Tuesday. OKTA gapped up and opened at 196.90 on Tuesday, but sold off all day long and finished at 184.17 by the close. Hey, selling is going to happen from time to time and OKTA appears to have started a possible selling episode on Tuesday. But that changes nothing as far as I'm concerned. I still expect blowout earnings on Thursday after the closing bell. OKTA's expected to post a loss of .18 per share. I'll be shocked if OKTA doesn't post a bottom line number that easily beats that estimate. Here's the current chart:

We've already seen a number of software companies beat Wall Street estimates. It's certainly possible that OKTA has already priced in a great report with its doubling of its stock price in the past two months. But I doubt the bulls will allow this stock to fall much before they resume their buying ways. The 20 day EMA, currently at 172.57, would be the initial level where I'd expect to see the bulls appear - again, that's assuming that the stock sells off further in the near-term. OKTA hasn't moved lower two consecutive sessions in a month, so let's see what happens on Wednesday first.

Happy trading!

Tom Bowley

Chief Market Strategist

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