On Wednesday, BMO Capital Markets adjusted its outlook on Okta, Inc (NASDAQ: NASDAQ:OKTA), a leading identity management company with a market capitalization of $13.88 billion. The firm increased its price target to $105 from $103 while maintaining a Market Perform rating on the stock. This adjustment follows Okta's recent announcement of stronger than anticipated results, with the company currently trading at $81.71.
Okta's performance has prompted BMO Capital to revise its expectations, citing the company's delivery of robust results across all metrics. According to InvestingPro data, the company maintains impressive gross profit margins of 75.82% and has achieved revenue growth of 18.74% over the last twelve months.
The analyst pointed to Okta's preliminary financial guidance for fiscal year 2026 as conservative, suggesting it sets a realistic benchmark, especially regarding the anticipated 7% year-over-year revenue growth. InvestingPro analysis suggests the stock is currently undervalued.
The company's current trajectory indicates a positive shift, yet BMO Capital has chosen to uphold its Market Perform rating. The decision reflects ongoing concerns about Okta's long-term product expansion and the competitive landscape within the identity management sector. For deeper insights into Okta's competitive position and growth prospects, InvestingPro subscribers can access comprehensive research reports and additional ProTips.
Despite these reservations, the increased price target to $105 signals a recognition of Okta's recent successes. The analyst emphasized that while the latest quarterly results indicate progress, the forecasted muted upsell rates and a decline in seat counts may continue to pose challenges to growth.
In summary, BMO Capital acknowledges Okta's strong performance but remains cautious about the company's future amidst a competitive environment. The firm's revised price target reflects a cautiously optimistic stance on Okta's growth potential and operational strategy.
In other recent news, Okta, Inc. has been a focus of various investment firms following its financial results. Okta's third-quarter cRPO exceeded estimates by $74 million or 4%, with the fourth-quarter cRPO guidance set $26 million above consensus.
The initial revenue guidance for fiscal year 2026 indicated a 7% year-over-year growth, aligning with buy-side expectations. KeyBanc maintained a Sector Weight on Okta, expressing a positive outlook on the company's potential role as a consolidator of identity services. However, caution was advised due to potential disruptions from imminent go-to-market strategy changes.
Needham increased its stock price target for Okta to $115, maintaining a Buy rating. This adjustment follows Okta's recent financial results, which highlighted improved company performance. Meanwhile, Scotiabank (TSX:BNS) raised its price target on Okta to $96, maintaining a Sector Perform rating. Truist Securities also adjusted its price target on Okta to $92, keeping its Hold rating. Canaccord Genuity maintained its Hold rating on Okta but increased the price target to $94.
Despite some operational challenges, Okta continues to be a dominant player in the identity management market, benefiting from the growing adoption of Zero Trust security frameworks.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.