On Monday, Jefferies reiterated a Hold rating on Okta, Inc (NASDAQ:OKTA), with a price target of $110.00. The firm's stance comes after reviewing Okta's second-quarter year-over-year cRPO (calculated remaining performance obligations) growth of 10.5%, which the analyst described as conservative.
This figure takes into account current economic uncertainties and the effects of a recent cybersecurity incident, which the analyst believes had less impact than initially anticipated.
Despite the cautious growth outlook, Okta's stock valuation currently stands at 33 times its next twelve months' (NTM) EBIT (earnings before interest and taxes). For the company's shares to experience a re-rating, the analyst suggests that Okta needs to demonstrate the ability to accelerate revenue growth to over 15% while also showing incremental leverage.
The analyst's recent meetings with Okta have led to an incrementally positive view on the company's long-term strategic vision. However, the firm is awaiting clear signs of a growth inflection before altering its rating. The affirmation of the $110 price target reflects this wait-and-see approach.
Okta specializes in identity and access management services, and its performance is closely watched as an indicator of the broader cybersecurity market's health. The company's strategic decisions and their impact on growth and profitability are key factors in the assessment of its stock value. The Hold rating indicates that while there may be positive aspects to Okta's strategy, Jefferies is looking for more concrete evidence of growth before changing its investment stance.
In other recent news, Okta Inc . has been the center of various financial analyses and developments. JPMorgan (NYSE:JPM) maintained a neutral stance on Okta, with a steady price target of $110. Guggenheim reiterated a buy rating on Okta, expecting the company's revenue and cRPO to exceed consensus estimates.
However, BMO Capital Markets lowered its price target from $110 to $100 while maintaining a market perform rating, citing potential macroeconomic uncertainties. Citi also maintained a neutral stance on Okta's stock, highlighting the company's strong leadership, but noting that significant work remains to fully capitalize on its growth opportunities.
RBC Capital maintained an outperform rating on Okta, following meetings with Okta's management in Europe. Okta recently reported a strong start to fiscal year 2025, with record profitability and cash flow, attributed to operational efficiencies, large customer acquisitions, and public sector growth. The company also expanded its board with the appointment of tech veteran Anthony Bates, as part of its ongoing efforts to strengthen its leadership team.
InvestingPro Insights
Okta's financial health and growth prospects are further illuminated by real-time data and insights from InvestingPro. The company's market capitalization stands at $16.66 billion, reflecting its substantial presence in the cybersecurity sector. Despite a negative P/E ratio of -59.23, indicating that the company is not currently profitable, analysts are optimistic about Okta's future. They predict that Okta will become profitable this year, as evidenced by a more favorable adjusted P/E ratio of -55.83 for the last twelve months as of Q1 2025.
InvestingPro Tips highlight that Okta holds more cash than debt on its balance sheet, providing it with financial flexibility. Additionally, the company's liquid assets exceed short-term obligations, ensuring it can meet its immediate financial commitments. This is particularly relevant given the company's revenue growth of over 20% in the last twelve months as of Q1 2025, signaling strong sales performance. However, it's important to note that while Okta has delivered a high return over the last decade, it does not pay a dividend to shareholders, which may influence investment decisions for income-focused investors.
For those seeking more insights, there are additional InvestingPro Tips available, which can be accessed by visiting the InvestingPro platform. With these data points and expert analyses, investors can better gauge Okta's potential for growth and profitability in the dynamic cybersecurity market.
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