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On Tuesday, JPMorgan analyst Brian Essex increased the price target for Okta, Inc (NASDAQ:OKTA) to $120 from the previous $120 while maintaining an Overweight rating on the stock. Currently trading at $87.16, InvestingPro analysis suggests the stock is undervalued, with impressive gross profit margins of 76.32%. Essex’s assessment followed Okta’s exceptional fourth-quarter results, which surpassed expectations in growth, profitability, and free cash flow (FCF).
The company’s strong performance was highlighted by a significant 25% year-over-year growth in Remaining Performance Obligations (RPO), reaching $4.2 billion this quarter. With a market capitalization of $14.94 billion and revenue growth of 15.33% in the last twelve months, Okta continues to show robust expansion. The Identity Governance (OIG) segment also saw expansion, now serving over 1,300 customers and generating more than $100 million in Annual Contract Value (ACV). Additionally, new products contributed to over 20% of the fourth-quarter bookings.
Essex noted Okta’s effective execution across its platform, including record sales productivity, robust performance across all business segments and geographies, and enhanced channel engagement, with 70% of deals being partner-influenced. This success is expected to alleviate investor concerns regarding Okta’s specialized sales structure for Workforce and Customer identity, which was implemented after acquiring Auth0.
The analyst also pointed out Okta’s promising federal sector momentum. Despite relatively low penetration rates, there is a significant opportunity to improve efficiency within this vertical. The company’s fourth-quarter outperformance has led to an increased forecast for fiscal year 2026 growth and profitability, exceeding initial expectations.
Despite headwinds such as ongoing seat-based renewal pressure anticipated to last until mid-FY26, Essex remains optimistic about Okta’s prospects. He believes that identity management is becoming increasingly important and that Okta’s robust fourth-quarter performance lays a solid foundation for the upcoming fiscal year.
In conclusion, JPMorgan’s revised price target reflects confidence in Okta’s continued execution and the potential for the stock to achieve a higher valuation. The firm’s Overweight rating remains unchanged as it anticipates further growth opportunities for Okta, particularly in Agentic/Machine-related Identity, new product penetration, and international expansion. InvestingPro data reveals the company maintains a GOOD overall financial health score, with analysts expecting profitable growth this year. For deeper insights into Okta’s valuation and growth prospects, including 8 additional ProTips and comprehensive financial analysis, check out the full Pro Research Report available on InvestingPro.
In other recent news, Okta, Inc. reported a strong fourth-quarter performance, exceeding expectations in several key financial metrics. The company’s calculated remaining performance obligations (cRPO) grew by 15% year-over-year, surpassing both company and analyst estimates. Okta’s operating margins reached 24.6%, and its free cash flow margin stood at an impressive 41.6%. Following these results, Okta raised its revenue growth guidance for fiscal year 2025 to 9.5% and increased its free cash flow margin forecast to 26%.
Multiple analyst firms have adjusted their price targets for Okta. Wolfe Research raised its target to $120, while Evercore ISI set a target of $122, both maintaining an Outperform rating. BTIG increased its target to $123, citing Okta’s significant positive variance in cRPO and robust guidance for fiscal year 2026. Barclays (LON:BARC) also raised its target to $115, highlighting Okta’s strong subscription coverage for the upcoming fiscal year. Truist Securities adjusted its price target to $100, acknowledging Okta’s solid fiscal performance and strategic focus on enterprise customers.
Despite some challenges, such as a slight decrease in the net revenue retention rate, analysts remain optimistic about Okta’s growth potential. The introduction of new products and strong sales productivity are seen as key drivers for future success. These developments suggest that Okta is on a positive trajectory, with analysts projecting continued growth and profitability.
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