Okta stock price target cut to $140 at DA Davidson

On Wednesday, DA Davidson analyst Rudy Kessinger adjusted the price target for Okta, Inc (NASDAQ:OKTA) shares, bringing it down to $140 from the previous $145, while maintaining a Buy rating on the stock. Currently trading at $125.50, near its 52-week high of $127.57, Okta has demonstrated impressive momentum with a 64.22% return over the past six months. Kessinger’s assessment followed Okta’s first fiscal quarter (FQ1) earnings report, which showcased a strong performance, exceeding expectations with a year-over-year calculated remaining performance obligations (CRPO) growth of 14% against the forecasted and consensus 12%. According to InvestingPro data, the company maintains robust gross profit margins of 76.32%.

Despite this robust growth, Okta’s guidance for the second fiscal quarter (FQ2) CRPO was set below consensus. Additionally, the company has chosen to reiterate its fiscal year 2026 (FY26) growth guidance of 9-10% year-over-year, even as they raised the free cash flow (FCF) margin guidance by one percentage point to approximately 27%. This conservative stance is attributed to a cautious approach due to potential risks from the current uncertain macroeconomic environment. InvestingPro analysis shows the company’s revenue growing at 15.33% with positive net income expected this year, suggesting potential upside to these conservative estimates. For deeper insights into Okta’s valuation and growth metrics, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Kessinger noted that the first quarter was not negatively affected by macroeconomic factors. Should these conditions remain stable, there is a strong possibility for upside, suggesting that the FY26 growth guidance may be overly cautious. The analyst’s commentary indicated confidence in Okta’s performance and potential, despite the slight reduction in the price target.

Okta’s management has expressed that the guidance now includes considerations for possible macroeconomic challenges. However, if the macro conditions experienced in FQ1 continue without deterioration, Okta may see better-than-expected results. Kessinger’s lowered price target reflects a degree of caution amidst optimism for the company’s growth trajectory and financial health.

In other recent news, Okta, Inc. reported its first-quarter financial results, showing a 12% year-over-year increase in revenue to approximately $688 million, surpassing the expected $680.1 million. The company’s non-GAAP EPS also exceeded expectations at $0.86, compared to the consensus estimate of $0.77. Despite these positive results, Okta maintained its full-year revenue guidance and projected a lower-than-expected CRPO for the second quarter, reflecting a cautious approach amid economic uncertainties. Evercore ISI raised its price target for Okta to $130, maintaining an Outperform rating, while Goldman Sachs reiterated a Buy rating with a $137 target, and BTIG confirmed a Buy rating with a $142 target. Jefferies, however, adjusted its price target to $130, maintaining a Hold rating. Analysts noted that Okta’s second-quarter guidance suggests a potential sequential decline in CRPO, a first for the company. The firm’s cautious outlook is attributed to potential macroeconomic challenges, although no material impact has been observed so far. Despite these concerns, Okta’s profitability exceeded expectations, with an improved free cash flow guidance for fiscal year 2026.

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