RBC Capital raises Okta stock price target to $115

On Friday, RBC Capital Markets adjusted their outlook on Okta, Inc (NASDAQ: NASDAQ:OKTA), raising the firm’s price target on the stock from $101.00 to $115.00. The research firm maintained its Outperform rating on the identity management company. Currently trading at $95.19, Okta appears slightly undervalued according to InvestingPro analysis. RBC Capital’s Matthew Hedberg expressed a growing confidence in Okta, citing several factors that contribute to a favorable risk/reward balance as the company approaches its earnings report.

Hedberg’s optimism is partly due to strong trends in the identity market and what he sees as the emergence of an "agentic AI opportunity." The company’s impressive 76.12% gross profit margins and robust revenue growth of 16.84% support this positive outlook. Additionally, he noted a stabilization in customer seats and Okta’s potential to further cross-sell within its existing customer base. RBC Capital believes that Okta is strategically positioned to disrupt the Identity market, which could be worth $80 billion, with its cloud-based model.

The identity category, according to Hedberg, is likely to thrive post-COVID-19. The pandemic has accelerated key mega-trends such as cloud adoption, digital transformation, and zero-trust security, potentially by up to five years. This acceleration is expected to continue driving estimates higher, once short-term macroeconomic uncertainty is reduced. InvestingPro data reveals that 36 analysts have recently revised their earnings estimates upward, with the company’s next earnings report due on March 3rd. Subscribers can access comprehensive analysis and additional insights through InvestingPro’s detailed research reports.

RBC Capital’s analysis reflects a broader industry perspective that sees identity management as a critical component of modern IT infrastructure. With the rise of remote work and increased online transactions, companies like Okta are at the forefront of providing solutions that secure user access and enable digital trust. As businesses continue to adapt to a post-pandemic world, the demand for such services is anticipated to grow, potentially benefiting Okta’s financial performance and stock valuation.

In other recent news, Okta, Inc. has made significant announcements that have caught the attention of investors. The company reaffirmed its guidance for the fourth fiscal quarter and the full fiscal year 2025, despite a recent workforce reduction of approximately 3%. This decision aligns with Okta’s ongoing strategy to prioritize growth by optimizing its operations. Additionally, Okta has appointed Eric Kelleher as the new President and Chief Operating Officer, following the retirement announcement of Eugenio Pace, who will step down in March 2025. Kelleher’s promotion aims to enhance operational efficiency and drive growth, as he will oversee various teams including Marketing and Customer First.

Analysts have responded to these developments with varying perspectives. KeyBanc has raised Okta’s stock price target to $125, maintaining an Overweight rating due to positive checks and an improvement in performance. Wolfe Research also maintains an Outperform rating with a $108 price target, emphasizing Okta’s strategic leadership changes. Meanwhile, Jefferies has reiterated a Hold rating with a $90 price target, expressing confidence in Okta’s growth strategy despite the workforce reductions. These recent developments highlight Okta’s commitment to strengthening its market position in the rapidly evolving cybersecurity landscape.

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