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On Tuesday, Wolfe Research adjusted its outlook on Okta, Inc (NASDAQ: NASDAQ:OKTA), increasing the price target from $108.00 to $120.00 while maintaining an Outperform rating on the stock. Currently trading at $87.16 with a market capitalization of $14.94 billion, the identity management leader ended the fiscal year with a strong fourth quarter, highlighting a 15% year-over-year growth in calculated remaining performance obligations (cRPO), surpassing the company’s own guidance of 9.2%. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value model.
The analysts noted that Okta’s recent success was attributed to several factors, including high sales productivity, a record number of bookings from Auth0, effective cross-selling strategies, and significant progress with channel partners. The company also saw continued momentum with large customers, adding 25 new clients with an annual contract value (ACV) over $1 million. Moreover, new products accounted for over 20% of fourth-quarter bookings, with the Okta Identity Governance (OIG) surpassing the $100 million ACV mark and over 1,300 customers adopting the solution. InvestingPro data reveals impressive gross profit margins of 76.32% and an overall financial health score rated as GOOD, suggesting strong operational efficiency.
Okta’s profitability metrics were also strong, with fourth-quarter operating margins reaching 24.6%, which exceeded the guidance of 23.2%. The free cash flow (FCF) margin stood at an impressive 41.6%, notably 10 percentage points ahead of consensus estimates. The company’s performance solidified its status as a Rule of 40+ company, a benchmark indicating a balance of growth and profitability.
Looking ahead, Okta raised its revenue growth guidance for fiscal year 2025 to 9.5% at the midpoint, an increase from the previous estimate of around 7%. The forecast for FCF margins was also lifted to 26% from 24%. For the first quarter, the company guided cRPO growth to 12%, which is above the consensus expectations of 9%.
Wolfe Research expressed confidence in Okta’s conservative guidance for both the first quarter and the full year. The analysts project a 14.4% year-over-year revenue growth in fiscal year 2026, assuming flat new cRPO bookings dollars, which contrasts with the growth of 9.6% in fiscal year 2025. In their view, Okta’s performance indicates a positive inflection point in the business, with potential for sustained double-digit growth driven by multiple factors, including legacy replacement, broader identity platform adoption, and Agentic AI security.
In other recent news, Okta, Inc. reported a strong fourth-quarter performance that exceeded expectations, leading to several analysts revising their outlooks on the company. Evercore ISI initiated coverage with an Outperform rating and a price target of $122, citing improved sales productivity and enhanced partner contributions. Truist Securities raised its price target to $100, highlighting Okta’s successful traction with its platform and the positive guidance for fiscal year 2026. BTIG increased its target to $123, noting the significant year-over-year increase in calculated remaining performance obligations (CRPO) and strong performance across various segments.
Barclays (LON:BARC) also adjusted its price target to $115, maintaining an Equalweight rating, and pointed to Okta’s improved subscription coverage for fiscal year 2026 as a positive indicator. Mizuho (NYSE:MFG) Securities upgraded Okta to Outperform and set a new target of $127, acknowledging the company’s robust growth in CRPO and the potential of its newer products. Okta’s management has projected a revenue growth of approximately 9-10% for fiscal year 2026, an increase from the previous forecast of 7%. Despite a slight miss in current remaining performance obligations bookings, the company remains optimistic about its future outlook.
These developments reflect a growing confidence among analysts in Okta’s strategic positioning and potential for continued growth in the identity management market.
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