Fed’s Powell opens door to potential rate cuts at Jackson Hole
On Tuesday, Guggenheim maintained a positive stance on Okta, Inc. (NASDAQ:OKTA), raising its price target to $140 from $130, while reiterating a Buy rating. The firm’s analysts expect Okta to surpass first-quarter consensus subscription and total revenue estimates, and likely exceed expectations for calculated remaining performance obligations (cRPO) as well. Guggenheim predicts that Okta will not only provide second-quarter total revenue guidance above Wall Street’s forecasts but also has the potential to increase its fiscal year 2026 revenue guidance. According to InvestingPro data, 30 analysts have revised their earnings upwards for the upcoming period, with price targets ranging from $75 to $155.
The analysts based their optimistic outlook on Okta’s consistent track record of outperforming cRPO estimates in previous quarters. Despite the challenge of forecasting cRPO accurately for the second quarter, they believe Okta should at least meet consensus guidance. Field checks conducted by Guggenheim this quarter yielded mixed results, with three out of four partners failing to meet their quarterly expectations. However, this was during the typically slow first quarter, and the partners indicated more positive pipeline developments. The company’s financial health appears solid, with InvestingPro analysis showing strong gross profit margins of 76.3% and more cash than debt on its balance sheet.
Guggenheim’s analysis of U.S. Federal government data suggests that new annual contract value (ACV) contributions in the first quarter will be minimal, estimated at about 3% of their plausible new ACV estimate. Despite this, the firm remains confident in Okta’s long-term vision. The company aims to offer a comprehensive identity platform that includes access management, identity governance, and privileged access, which is particularly appealing in the mid-market and small-to-medium business (SMB) sectors where significant untapped opportunities exist.
Okta’s stock performance has been notably strong, outperforming the IGV index since the start of 2025, with a 60% gain compared to the IGV’s 5% increase. With a market capitalization of $22 billion, the stock currently trades at approximately 7.4 times enterprise value to next twelve months (EV/NTM) recurring revenue and 29 times EV/NTM free cash flow (FCF). InvestingPro analysis indicates the stock is trading near its Fair Value, with impressive YTD returns of 60.5% and a six-month gain of 71.6%. Following these developments, Guggenheim has adjusted its price target upward by $10. For deeper insights into Okta’s valuation and growth metrics, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
Okta is scheduled to report its first-quarter fiscal year 2026 earnings on Tuesday, May 27, after the market closes. With revenue growth of 15.3% in the last twelve months and analysts expecting continued profitability this year, investors and analysts will be watching closely to see if the company’s performance aligns with Guggenheim’s positive projections.
In other recent news, Okta, Inc. has been the focus of several analyst updates and developments. RBC Capital Markets raised its price target for Okta, citing favorable risk/reward into earnings and long-term trends in the identity market. KeyBanc Capital Markets also increased its price target from $135 to $155, emphasizing Okta’s strong position in the identity management sector and its potential for growth. DA Davidson followed suit by raising its price target to $145, expressing confidence in Okta’s ability to exceed its fiscal year 2026 guidance.
BMO Capital Markets adjusted its price target to $135, maintaining a Market Perform rating while noting the possibility of Okta surpassing revenue expectations for the April quarter. Additionally, Okta’s inclusion in the S&P MidCap 400 index has been announced, replacing Berry Global Group (NYSE:BERY) Inc. This move is expected to increase demand for Okta’s stock from index-tracking funds.
These developments reflect a broader investor confidence in Okta’s market position and growth potential, with analysts highlighting both opportunities and challenges in the cybersecurity space.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.