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On Wednesday, BTIG analyst Gray Powell confirmed a Buy rating on Okta, Inc. (NASDAQ:OKTA) with a steady price target of $142.00. According to InvestingPro data, Okta maintains a "GOOD" financial health score and currently trades near its 52-week high of $127.57, with analysis suggesting the stock is slightly undervalued at current levels. Powell highlighted Okta’s solid performance in the first quarter of fiscal year 2026, where the company’s Current Remaining Performance Obligations (CRPO) reached $2,227 million, marking a 14% year-over-year increase. This figure surpassed BTIG’s estimate of $2,188 million and was slightly above the consensus estimate of $2,185 million. InvestingPro data reveals impressive gross profit margins of 76.32% and sustained revenue growth of 15.33% over the last twelve months.
Okta’s operating income and free cash flow (FCF) also significantly exceeded expectations. Despite the positive results, Okta exercised caution in its guidance, maintaining unchanged full-year revenue targets and projecting a lower-than-expected CRPO for the second quarter of fiscal year 2026 at $2,202.5 million, a 10.4% year-over-year increase, which is below the street’s expectation of $2,229 million and a decrease from the first quarter levels.
The analyst acknowledged that Okta traditionally guides its CRPO conservatively, especially in the current uncertain economic climate. However, the forecasted sequential decline in CRPO for the second quarter, which has never occurred before, has left investors puzzled.
In response to the guidance and market conditions, BTIG made minor adjustments to its forecasts for Okta. The firm slightly lowered its revenue estimate for fiscal year 2027 to $3,141 million, a 9.8% year-over-year increase from the previous estimate of $3,166 million, which would have been a 10.7% increase. On a more positive note, BTIG raised its FCF projection for the same period to $866 million from $838 million, while reiterating the Buy rating on Okta’s stock. InvestingPro subscribers have access to 13 additional ProTips and comprehensive analysis through the Pro Research Report, offering deeper insights into Okta’s valuation and growth prospects.
In other recent news, Okta, Inc. reported strong financial results for the first quarter of fiscal year 2026. The company exceeded expectations with a non-GAAP earnings per share (EPS) of $0.86, compared to the consensus estimate of $0.77, and reported revenue of $688 million, surpassing the forecast of $680.1 million. Despite these positive outcomes, Okta’s stock experienced a decline in aftermarket trading, reflecting investor concerns over future guidance amidst macroeconomic uncertainties. Analysts have reacted to these developments with mixed assessments; Jefferies maintained a Hold rating on Okta, while Stifel raised its price target from $120 to $130, reiterating a Buy rating. Citizens JMP also reiterated a Market Perform rating, suggesting a neutral outlook on the stock’s future performance.
Okta’s calculated remaining performance obligations (cRPO) grew by 14% year-over-year, slightly above the company’s guidance but below investor expectations of 15%-16%. The company anticipates a cautious approach to its fiscal year 2026 guidance due to economic uncertainties, with a projected revenue growth of 9-10% for the year. Despite the challenges, Okta increased its fiscal year 2026 free cash flow guidance to approximately 27%, indicating a stronger-than-expected performance in profitability.
Okta’s management has emphasized the company’s strategic focus on product innovation and identity security enhancements, including new offerings in AI and identity governance. The firm continues to see traction with its Auth0 platform and new product lines, which have contributed to its robust quarterly performance. As Okta navigates the current economic landscape, analysts and investors will closely monitor its ability to maintain growth and profitability in the coming quarters.
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