KeyBanc raises Okta stock price target to $125 on positive outlook

On Tuesday, KeyBanc analyst Eric Heath increased the price target for Okta Inc (NASDAQ:OKTA) shares to $125 from the previous $115, while maintaining an Overweight rating. The new target represents potential upside from the current price of $97.66, with the stock already showing impressive momentum, having gained nearly 24% year-to-date. According to InvestingPro data, the stock’s RSI suggests it’s in overbought territory. Heath’s decision follows a series of positive checks and an improvement from previous quarters.

In his analysis, Heath noted that fourth-quarter checks were strong and showed an improvement over prior quarters. The company’s solid performance is reflected in its impressive 76.12% gross profit margins and 16.84% revenue growth over the last twelve months. He also mentioned that Okta has seen some instances of displacing SailPoint, an industry competitor. Despite receiving mixed feedback from partners regarding Okta’s channel alignment, the overall perspective was optimistic.

Heath recalled that Okta had reaffirmed its guidance even as it announced a reduction in force (RIF) of 3%, which he interpreted as a positive signal. Additionally, on the same day, Okta announced significant changes in its executive team. Eugenio Pace, President of Business Operations, is retiring, and Eric Kelleher is being promoted to President and COO.

The analyst expressed a neutral stance on the executive changes, recognizing the potential benefits of focusing on growth and the continuity provided by an internal promotion. However, he also acknowledged that given Okta’s past execution challenges, some investors might have preferred a fresh external perspective.

KeyBanc continues to favor Okta as one of its top picks for several reasons. Heath highlighted the widening importance of identity security, the potential for seat headwinds to abate by fiscal year 2026, positive feedback on Identity Governance and Administration (IGA), and an expectation for it to contribute more significantly this year. He also pointed to the possibility of improved execution with the go-to-market specialization.

Lastly, Heath mentioned Okta’s exposure to the federal sector, which is estimated at around mid-single-digit percentage points, noting it has been a strong growth driver in recent quarters. Investors are looking forward to hearing more from Mr. Kelleher at KeyBanc’s upcoming Emerging Technology Summit (ETS) conference in San Francisco next month. With 36 analysts recently revising their earnings upward, InvestingPro subscribers can access over 30 additional insights and detailed financial metrics to better understand Okta’s growth trajectory. The company’s comprehensive Pro Research Report is available for subscribers, offering deep-dive analysis and actionable intelligence for informed investment decisions.

In other recent news, Okta, Inc. has seen significant developments in its leadership and workforce structure. Wolfe Research has maintained an Outperform rating for the company, coinciding with Okta’s announcement of leadership changes. The company has appointed Eric Kelleher as its new President and Chief Operating Officer, a role aimed at driving growth and enhancing the company’s position in the identity solutions market. Meanwhile, current President of Business Operations, Eugenio Pace, is set to retire in March 2025.

In addition, Okta has announced a workforce reduction plan affecting 3% of its staff, a move aimed at reallocating resources to support growth-oriented priorities. Despite this, Okta has reaffirmed its financial guidance for the fourth quarter and fiscal year 2025. Jefferies has reiterated a Hold rating on Okta stock, with a price target of $90.

In a separate report, Bernstein analysts maintained their outlook on Amazon (NASDAQ:AMZN) Web Services (AWS) and Datadog (NASDAQ:DDOG), despite concerns over weaker performances by their competitors. They expect AWS’s growth to slow down in the first and second quarters of 2025 due to supply constraints, before reaccelerating in the second half of the year. For Datadog, Bernstein maintains an Outperform rating and a price target of $151.

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