Guggenheim cuts Okta stock price target to $138 from $140

On Wednesday, Guggenheim maintained a Buy rating on Okta, Inc (NASDAQ:OKTA) but reduced its price target from $140.00 to $138.00. The adjustment followed Okta’s recent financial report, which, despite surpassing consensus estimates, revealed signs of concern. The company’s New Annual Contract Value (ACV) experienced a significant decline of 28% compared to the previous period, although it was measured against a tough comparison. According to InvestingPro data, Okta has shown remarkable strength recently, with a 64% surge in the past six months and is currently trading near its 52-week high of $127.57.

Okta’s calculated Remaining Performance Obligations (cRPO) increased by 14%, which was considered acceptable. However, the guidance for 10-11% growth fell short of the consensus expectation of 11.6%. Notably, the better-than-expected results from the first quarter (F1Q) were not carried over into the full-year guidance, which remained unchanged. The company’s management characterized this decision as cautious, citing the current uncertain sales environment. InvestingPro data shows that Okta maintains impressive gross profit margins of 76.3% and achieved 15.3% revenue growth in the last twelve months.

Despite Okta’s assertion of a "solid" start to the year, the Guggenheim analyst expressed skepticism, pointing to a decline in business momentum as evidenced by a two-year stack of New ACV growth. The question raised was whether the disappointing F1Q results were indicative of future performance or merely a temporary dip following a strong fourth quarter (F4Q), with potential for improvement ahead.

Guggenheim’s "Plausible Scenario" models assume a continuation of the current trend, leading to the slightly lowered price target. However, the firm suggests that a rebound in performance could offer additional upside. With Okta’s valuation at 6.3 times Enterprise Value to Next (LON:NXT) Twelve Months (EV/NTM) Recurring Revenue and 26 times EV/NTM Free Cash Flow after hours, Guggenheim finds the investment case for Okta compelling enough to maintain a Buy rating, even if the stock may face short-term challenges.

In other recent news, Okta, Inc. reported first-quarter earnings for fiscal year 2026 that exceeded FactSet consensus estimates across several key financial metrics, including revenue, operating margin, and earnings per share. Despite this strong performance, the company maintained a cautious outlook for the upcoming quarter’s calculated remaining performance obligations (cRPO), citing macroeconomic uncertainties and a focus on larger deals. Okta has raised its guidance for operating income, EPS, and free cash flow for the fiscal year, reflecting management’s confidence, although they chose not to adjust their revenue outlook.

Analysts have reacted to these developments with varied responses. Cantor Fitzgerald reaffirmed an Overweight rating with a $130 price target, highlighting Okta’s strategic investments and emerging product areas as key growth drivers. Truist Securities maintained a Hold rating with a $100 price target, noting Okta’s strong performance but expressing caution due to economic uncertainties. TD Cowen raised its price target to $115 while keeping a Hold rating, emphasizing Okta’s success in platform solutions but remaining wary of broader economic challenges.

DA Davidson adjusted its price target down to $140, maintaining a Buy rating, and expressed confidence in Okta’s potential despite the cautious guidance. Meanwhile, Evercore ISI increased its price target to $130 and retained an Outperform rating, acknowledging Okta’s solid quarterly performance but highlighting investor concerns over subscription revenue growth and potential macroeconomic impacts. These recent developments reflect a mixed but generally positive outlook for Okta as it navigates through economic uncertainties and seeks to capitalize on its strategic initiatives.

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