Sell Okta Stock. Microsoft and Other Risks Loom, Says Analyst.

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BofA Global Research is pessimistic about Okta stock’s future performance.

On Monday, analyst Madeline Brooks initiated coverage on the cloud-software company with an Underperform rating. She established a $64 price target for

Okta

stock (ticker:

OKTA

).

The company’s software allows corporations to manage and authenticate user identification for services and applications across multiple devices.

“We see elevated risks of slow growth and limited margin upside resulting from intense competition with Microsoft…and other structural challenges,” she wrote.

In early trading Monday, Okta stock traded down 2.3% to $74.63. The company declined to comment on the analyst note.

Brooks noted the rising threat from

Microsoft

(

MSFT

) as the user-authentication market has become more saturated. She is concerned the technology giant may hurt Okta’s ability to maintain pricing levels for its services. Therefore, the analyst predicts Okta will grow slower than the Wall Street consensus over the next two years.

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“We see persistent go-to-market challenges including high sales force attrition,” the analyst wrote.

Okta is among the many cloud companies in the process of implementing head count reductions to lower operating expenses and improve profitability. Earlier this month, the company announced a restructuring plan to reduce its workforce by 300 employees. On Monday, another cloud-software company

Twilio

(

TWLO

) said it would lay off 17% of its staff.

Okta’s stock has dropped 61% over the past 12 months.

Write to Tae Kim at [email protected]