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On Tuesday, Barclays (LON:BARC) analyst Saket Kalia increased the price target for Okta, Inc. (NASDAQ:OKTA) to $115 from the previous $105, while keeping an Equalweight rating on the stock. Currently trading at $87.16, InvestingPro analysis suggests the stock is undervalued. The adjustment follows Okta’s fourth-quarter performance, which featured a notably strong calculated remaining performance obligations (cRPO), a key indicator of future revenue.
Okta’s cRPO for the fourth quarter of 2025 indicated a subscription coverage for fiscal year 2026 between 79-80%, an improvement from the same period the previous year. This suggests that the fourth quarter was significantly better than anticipated, and raises the possibility of higher revenue in FY26 than initially expected. Supporting this optimistic outlook, InvestingPro data shows 36 analysts have revised their earnings upward for the upcoming period, with price targets ranging from $75 to $140. Kalia highlighted three forward-looking points in his analysis, including the potential upside in FY26 revenue.
The analyst identified two product areas as particularly investable: Okta’s Identity Governance and Administration (IGA) business, which includes approximately $100 million of Okta Identity Governance (OIG) business and around $300 million of Workflow business, totaling about $400 million in annual contract value in the robust IGA market. With impressive gross profit margins of 76.32% and revenue growth of 15.33% in the last twelve months, the company’s financial metrics support its market position. Additionally, the introduction of new Workforce Identity Suites was noted, which are reminiscent of CyberArk’s bundling strategy, offering customers increased value.Want deeper insights? InvestingPro subscribers get access to over 30 additional financial metrics and expert analysis for Okta, including detailed profitability trends and growth forecasts.
From a modeling standpoint, Kalia expects the net retention rate (NRR) of 107% to stabilize, plus or minus a point. The guidance for the first quarter of 2026’s cRPO has been set with the consideration of potential disruptions from sales specialization and typically slower bookings for the season. However, based on recent trends in cRPO bookings, another beat in the first quarter would not come as a surprise.
The revised price target of $115 is based on a 24x multiple of Okta’s expected fiscal year 2027 free cash flow (FCF), reflecting a more positive outlook for the company’s performance in the coming years.
In other recent news, Okta Inc . reported a strong performance for the fourth quarter of fiscal year 2025, surpassing both earnings and revenue expectations. The company achieved earnings per share of $0.78, exceeding the forecasted $0.74, and reported revenue of $682 million, which was higher than the anticipated $668.91 million. Following these results, Mizuho (NYSE:MFG) Securities upgraded Okta’s stock rating to Outperform, raising the price target to $127 from $110, citing significant growth in calculated remaining performance obligations (cRPO) and the company’s strategic positioning. Similarly, DA Davidson analysts elevated Okta’s stock rating to Buy, increasing the price target to $125 from $90, driven by Okta’s impressive fiscal fourth-quarter results.
Okta’s management described the quarter’s performance as a "blowout," with a 15% year-over-year increase in calculated billings and remaining performance obligations, surpassing the guided 9%. The company also achieved record bookings, surpassing $1 billion in total contract value, and reported a free cash flow margin improvement to 25%. Okta’s sales productivity reached a multi-year peak, with contributions from enterprise customers and channel partners on the rise. The company’s newer products are making a more significant impact on growth, with double-digit growth now appearing sustainable.
Looking ahead, Okta’s management has provided guidance for fiscal year 2026, projecting revenue growth of 9-10% year-over-year, compared to the previously forecasted 7%. Analysts at Mizuho and DA Davidson expressed increased confidence in Okta’s ability to capitalize on its dominant position in the identity management market, with expectations of continued robust growth.
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