Scotiabank raises Okta stock price target to $115

On Wednesday, Scotiabank (TSX:BNS) analyst Patrick Colville updated the financial outlook for Okta, Inc (NASDAQ:OKTA), raising the price target to $115 from the previous $109 while maintaining a Sector Perform rating. This adjustment follows Okta’s recent disclosure of its fiscal first quarter results, which, according to Colville, were less impressive than the company’s strong performance at the end of the year. The stock currently trades near its 52-week high of $127.57, having delivered an impressive 59.26% return year-to-date. According to InvestingPro analysis, the stock appears slightly undervalued based on its Fair Value model.

Okta’s reported results indicated a slowdown in calculated remaining performance obligations (cRPO) growth, and the guidance for the second fiscal quarter suggests a continued deceleration in this metric. Despite this, the company exhibited robust operating margins, albeit the forecast only indicated a slight improvement. InvestingPro data reveals impressive gross profit margins of 76.32% and positive revenue growth of 15.33% over the last twelve months. Subscribers can access 13 additional ProTips and comprehensive financial metrics through the Pro Research Report.

Colville highlighted management’s cautious stance in their financial outlook, attributing it to the prevailing uncertain macroeconomic environment. He noted that while Okta has significantly outperformed the iShares Expanded Tech-Software Sector ETF (IGV) year-to-date, the expectations embedded in the stock’s valuation may have been too optimistic.

While acknowledging Okta’s strong competitive position in workforce identity management and the growing adoption of customer identity management due to digital transformation, Colville pointed out that sustained top-line acceleration is a key factor for a more positive stance on Okta’s stock. He mentioned that until there are clear signs of this acceleration, his firm would remain neutral.

In conclusion, Scotiabank’s updated price target reflects a recognition of Okta’s strengths, including its competitive edge and history of improving profitability. However, the firm is taking a cautious approach, waiting for more evidence of consistent revenue growth before changing its rating.

In other recent news, Okta, Inc. reported its fiscal first-quarter results, which exceeded the company’s guidance, leading to various analyst updates. Stifel raised its price target for Okta to $130, noting the company’s strong performance and maintaining a Buy rating. Similarly, Needham increased its price target to $125, acknowledging Okta’s market expansion strategies and new product introductions, despite some underwhelming calculated remaining performance obligations (cRPO) figures. UBS adjusted its price target downward to $130 from $150 but retained a Buy rating, citing slight underperformance in revenue expectations and a conservative outlook on cRPO growth.

Canaccord Genuity lifted its price target to $115, maintaining a Hold rating, emphasizing Okta’s leadership in the Zero Trust security market. Meanwhile, Susquehanna kept a Neutral rating with a $105 target, reflecting a balanced view of Okta’s performance amid macroeconomic concerns. Analysts across the board have highlighted Okta’s strategic moves, such as its foray into Privileged Access Management and its strong position in the identity security space. Despite the mixed analyst ratings, Okta’s management remains cautiously optimistic, reaffirming its full-year revenue forecast. Investors will continue to watch Okta’s developments closely, especially in light of its strategic expansions and the broader economic environment.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.