Wolfe Research cuts Okta stock price target to $130 from $140

On Wednesday, Wolfe Research adjusted its price target on Okta, Inc. (NASDAQ:OKTA) to $130.00 from the previous $140.00, while maintaining an Outperform rating on the company’s shares. The revision followed Okta’s first-quarter fiscal year 2026 earnings release, which led to a significant drop in the company’s stock price in after-hours trading. According to InvestingPro data, Okta currently trades at $125.50, with analyst targets ranging from $75 to $150.

Okta’s stock experienced a downturn of approximately 13% after the earnings announcement. Before the release, the stock had seen a substantial increase of 59% year-to-date, outperforming the IGV, which rose by 4%, and Wolfe Research’s All Security Index, which increased by 11%. Over the last three months, excluding the after-hours movement, Okta’s shares had appreciated by 41% compared to 8% for the IGV and 5% for the All Security Index. InvestingPro data confirms this strong momentum, with the stock trading near its 52-week high of $127.57 and showing an impressive 64% return over the past six months. InvestingPro subscribers have access to 13 additional key insights about Okta’s performance and valuation metrics.

Despite the post-earnings decline, Wolfe Research is maintaining its total revenue estimates for fiscal years 2026 and 2027, projecting yearly growth rates of 9.4% and 8.2%, respectively. Okta’s guidance for the second-quarter calculated remaining performance obligations (cRPO) growth stands at 10.4%. Wolfe Research has adjusted its cRPO projections to $2.409 billion for FY26 and $2.594 billion for FY27, indicating growth of 7.2% and 7.7%, a slight decrease from previous estimates.

The firm also updated its forecasts for Okta’s operating margins, aligning the FY26 estimate with the company’s guidance of 25% and slightly increasing the FY27 operating margin estimate to 26.3% from 26.2%. Free cash flow (FCF) margin estimates for FY26 remain consistent with management’s outlook of 27%, with an increase to 28.3% for FY27.

In terms of valuation, following the after-hours trading adjustment, Okta is trading at 6 times calendar year 2026 revenue, which is above its one and three-year averages but below the five-year average. The stock’s CY26E free cash flow multiple is approximately 21 times, which is below the one-year average and represents a 12% discount compared to the median FCF multiple of Wolfe Research’s Middleweight Efficiency comparison group. InvestingPro analysis shows Okta maintains impressive gross profit margins of 76.32% and holds more cash than debt on its balance sheet. The company’s current P/E ratio of 734.71 reflects high growth expectations. A comprehensive valuation analysis is available in the Pro Research Report, which provides detailed insights for over 1,400 US stocks.

Wolfe Research believes that Okta’s guidance for the upcoming quarter and full fiscal year is conservative and anticipates potential upside to both revenue and FCF margin outlooks. However, the analyst noted that the lower-than-expected first-quarter results and the second-quarter cRPO guidance falling below consensus estimates have somewhat diminished investor confidence. The new $130 price target is based on CY26E revenue and FCF multiples of 7.2x and 25.6x, respectively. Despite the reduced price target, Wolfe Research reaffirms Okta’s Outperform rating.

In other recent news, Okta, Inc. reported strong first-quarter earnings for fiscal year 2026, surpassing consensus estimates in revenue, operating margin, and earnings per share. Despite these positive results, the company maintained its conservative full-year guidance, citing macroeconomic uncertainties. Analysts from Guggenheim, Cantor Fitzgerald, and DA Davidson have maintained their positive ratings on Okta, with Guggenheim and DA Davidson slightly lowering their price targets to $138 and $140, respectively. Meanwhile, Cantor Fitzgerald kept its price target at $130, highlighting Okta’s strategic investments and emerging product areas as potential growth drivers.

Truist Securities and TD Cowen have opted for a more cautious outlook, maintaining Hold ratings with adjusted price targets of $100 and $115, respectively. Truist noted Okta’s strong first-quarter performance but highlighted market caution due to economic uncertainties. TD Cowen emphasized Okta’s success in capturing market preference for platform solutions, yet remains wary of broader economic conditions.

Okta’s management has expressed confidence in its financial health, raising guidance for operating income and free cash flow for the fiscal year. However, the company has chosen to keep its revenue outlook unchanged, reflecting ongoing caution. Analysts suggest that Okta’s strategic initiatives and market positioning could offer growth opportunities, contingent on stable macroeconomic conditions.

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