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On Wednesday, KeyBanc Capital Markets adjusted its outlook on Okta, Inc. (NASDAQ:OKTA), reducing the price target from $155.00 to $140.00. Despite the downward revision, the firm maintained its Overweight rating on the stock. KeyBanc’s analyst Eric Heath cited a modest beat in Okta’s first fiscal quarter calculated Remaining Performance Obligations (cRPO) and a second fiscal quarter cRPO guide that fell short of expectations. However, the analyst reiterated confidence in the stock with the Overweight rating still in place. This confidence appears well-founded, as InvestingPro data shows Okta has delivered impressive returns, with the stock up over 59% year-to-date and trading near its 52-week high of $127.57.
The company’s unchanged revenue outlook for fiscal year 2026 and an improved forecast for free cash flow (FCF) margin, which was raised by one percentage point, were both highlighted as positive notes. Management reported that the first fiscal quarter showed no significant macroeconomic impact and that the go-to-market (GTM) execution after early-year changes met expectations. InvestingPro analysis reveals Okta’s strong financial foundation, with impressive gross profit margins of 76.32% and annual revenue of $2.61 billion. The company maintains a healthy balance sheet, holding more cash than debt.
However, Heath mentioned that management had observed an increase in macroeconomic uncertainty after the first quarter, based on discussions with customers. This led to a more cautious approach in their guidance. Despite these concerns, there were several strong points during the quarter for Okta. The analyst pointed out that Auth0 and the public sector, which included two of the top three deals, demonstrated robust performance.
Additionally, the company saw its pipeline strengthen throughout March and April. Okta also had a successful quarter in terms of new business, with the majority of the top 10 deals consisting of new customers. This suggests that Okta continues to expand its market presence and attract fresh business, even as it navigates a more uncertain macroeconomic landscape.
In other recent news, Okta, Inc. has reported its fiscal first-quarter results, showing a strong start to the year with a revenue beat. Despite this, the company opted to maintain a conservative outlook for its full-year guidance, citing an uncertain macroeconomic environment. Analysts have responded with mixed reactions: Bernstein maintained an Outperform rating with a $132 price target, while Loop Capital kept a Buy rating and a $140 target, highlighting Okta’s strategic focus on large enterprises and potential growth from its GenAI-driven offerings. Scotiabank (TSX:BNS) adjusted its price target to $115 but maintained a Sector Perform rating, noting a slowdown in certain growth metrics. Needham raised its price target to $125, maintaining a Buy rating, while expressing concerns over the company’s conservative guidance. Susquehanna, on the other hand, maintained a Neutral stance with a $105 target, acknowledging Okta’s solid performance but emphasizing macroeconomic concerns. These developments reflect Okta’s cautious approach amid broader economic uncertainties while analysts highlight both potential and challenges in its growth trajectory.
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