Okta shares hold Buy rating on demand stabilization

BTIG maintained its Buy rating on Okta, Inc (NASDAQ:OKTA) with a price target of $128.00. The firm's optimism is based on recent discussions indicating a stabilization and potential improvement in demand for Okta's services. The sentiment around the company has been recovering since the security breach in October 2023, with negative views gradually dissipating.

The feedback from industry contacts about Okta's new product initiatives, including Identity Governance (IGA), Privileged Access Management (PAM), and Identity Threat Detection and Response (ITDR), was varied. While there was noticeable skepticism regarding the uptake of PAM and ITDR solutions, signs of continued traction for IGA in midmarket accounts were evident.

BTIG's analysis suggests that Okta is on track to sustain its growth momentum. The firm expresses confidence in its forecasts for the second fiscal quarter of 2025, anticipating that Okta will be able to maintain growth in the mid-teens over the long term.

Despite mixed reactions to some of Okta's newer products, the overall market response has been encouraging enough for BTIG to reassert its Buy recommendation. The firm's position reflects a belief in Okta's capacity to navigate past challenges and capitalize on market opportunities, particularly in the midmarket segment.

Okta Inc . reported a strong start to its fiscal year 2025, with record profitability and cash flow credited to operational efficiencies, large customer acquisitions, and public sector growth. The company also expanded its board with the appointment of tech veteran Anthony Bates.

Okta's recent developments have drawn the attention of several analyst firms. Jefferies maintained a hold rating on Okta shares with a price target of $110, following a review of Okta's year-over-year cRPO growth of 10.5%. JPMorgan also reiterated a neutral stance on Okta, with a steady price target of $110.

Guggenheim expects Okta's revenue and cRPO to exceed consensus estimates, maintaining a buy rating with a price target of $130. Meanwhile, Citi maintained a neutral stance on Okta's stock, citing the company's strong leadership and potential for growth re-acceleration.

InvestingPro Insights

Recent data from InvestingPro underlines Okta Inc's (NASDAQ:OKTA) financial resilience and future prospects. With a market capitalization of $16.45 billion and a notable revenue growth of 20.45% in the last twelve months as of Q1 2023, the company demonstrates strong potential for expansion. Despite a negative P/E ratio of -58.71, which signals that the company has not been profitable over the past year, analysts are forecasting a positive turn, predicting profitability for the current year. This aligns with the BTIG's optimistic outlook for Okta's growth momentum.

Two key InvestingPro Tips that support BTIG's recommendation are Okta's strong liquidity position, with liquid assets surpassing short-term obligations, and the expectation of net income growth this year. These factors may offer investors additional confidence in the company's ability to manage its finances effectively and deliver on its growth promises. For those interested in a deeper analysis, InvestingPro provides further tips, including insights on Okta's cash and debt balance, which could be crucial for understanding the company's long-term stability and investment potential.

Investors might also find encouragement in Okta's robust gross profit margin of 75.15%, indicating efficient cost management relative to revenue. Although Okta does not pay a dividend, which could be a consideration for income-focused investors, the company has exhibited a high return over the last decade, suggesting potential value for growth investors. With additional insights available on InvestingPro, including a total of seven tips for Okta, investors can gain a more comprehensive understanding of the company's investment profile.

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