KeyBanc expressed a positive outlook on the importance of identity within the security sector, Okta (NASDAQ:OKTA)'s potential role as a consolidator of identity services, and the possibility of product catalysts such as Identity Governance and Administration (IGA), Privileged Access Management (PAM), Customer Identity and Access Management (CIAM), and Identity Threat Detection and Response (ITDR).
InvestingPro's Fair Value analysis suggests Okta is currently undervalued, with analyst targets ranging from $75 to $140 per share. However, the firm also advised caution due to possible ongoing effects from last year's security breach, challenges related to seat-based sales, and potential disruptions from imminent go-to-market (GTM) strategy changes for specialized sellers in the Workforce Identity Cloud (WIC) and Customer Identity Cloud (CIC).
Okta's third-quarter cRPO exceeded projections by $74 million or 4%, compared to the trailing twelve months (TTM) average beat of $45 million or 2%. The fourth-quarter cRPO guidance was set $26 million above consensus, marking a shift from the previous two quarters where the guidance was below. The initial revenue guidance for fiscal year 2026 indicated a 7% year-over-year growth, which was under the consensus estimate of 9% year-over-year. However, it was noted that this figure aligns with buy-side expectations.
Management at Okta pointed out that the fourth-quarter cRPO and fiscal year 2026 revenue guidance have been adjusted to remove the conservative estimates previously included to account for potential impacts from the security incident that occurred in October 2023. The company has demonstrated robust revenue growth of 18.74% over the last twelve months, maintaining strong liquidity with a current ratio of 1.83.
Get access to more detailed insights and 7 additional key tips about Okta with an InvestingPro subscription. They also mentioned that the 5 percentage points of outperformance seen from the initial fiscal year 2025 revenue guide are not expected to be replicated in fiscal year 2026. Nonetheless, typical seasonal growth in fourth-quarter cRPO and consistent cRPO coverage may indicate a similar degree of upside potential.
Key performance indicators (KPIs) showed mixed results, with the net revenue retention (NRR) rate falling 2 points to 108% and an expectation of a further decrease in the fourth quarter. The number of new logos acquired remained modest at 150. The federal vertical showed strength, contributing to five of the top ten deals for the quarter.
KeyBanc expressed a positive outlook on the importance of identity within the security sector, Okta's potential role as a consolidator of identity services, and the possibility of product catalysts such as Identity Governance and Administration (IGA), Privileged Access Management (PAM), Customer Identity and Access Management (CIAM), and Identity Threat Detection and Response (ITDR).
InvestingPro's Fair Value analysis suggests Okta is currently undervalued, with analyst targets ranging from $75 to $140 per share. However, the firm also advised caution due to possible ongoing effects from last year's security breach, challenges related to seat-based sales, and potential disruptions from imminent go-to-market (GTM) strategy changes for specialized sellers in the Workforce Identity Cloud (WIC) and Customer Identity Cloud (CIC).
In other recent news, Okta, Inc. has seen significant attention from various investment firms following its recent financial results.
Needham increased its stock price target for Okta to $115, maintaining a Buy rating, while Scotiabank (TSX:BNS) raised its price target to $96, sustaining a Sector Perform rating. Other firms, including Truist Securities, Canaccord Genuity, and Mizuho (NYSE:MFG), also adjusted their price targets, with all three maintaining a Hold or Neutral rating on Okta's stock.
These adjustments come in the wake of Okta's recent earnings report, which showcased a 14% increase in revenue and a 13% rise in calculated remaining performance obligations (cRPO) growth. Despite this positive performance, Okta's preliminary revenue growth guidance for fiscal year 2026 is set at just 7% year-over-year, falling short of the Street's forecast of approximately 10%.
InvestingPro analysis suggests that Okta maintains impressive gross profit margins of 75.82% and holds more cash than debt on its balance sheet, indicating strong financial flexibility. These are recent developments that investors should consider when assessing the company's performance.
The robust operational efficiency and strong revenue growth over the past year, along with the expected net income growth this year, signal promising prospects for Okta. Despite operational challenges, Okta continues to be a dominant player in the identity management market, benefiting from the growing adoption of Zero Trust security frameworks.
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