On Thursday, BofA Securities revised its stance on Okta, Inc (NASDAQ: NASDAQ:OKTA), upgrading the stock from Underperform to Buy and significantly increasing the price target to $135 from the previous $64. The upgrade is attributed to Okta's strong expected performance in 2024 and the anticipation of continued outperformance in the fiscal year 2025.
The previous concerns that influenced BofA Securities' Underperform rating, such as the rate of new customer growth, potential saturation within the existing customer base, and ongoing execution challenges, are now believed to be diminishing.
BofA Securities now estimates Okta's value based on 9 times the expected enterprise value to sales ratio for the calendar year 2026, a significant increase from the prior 5 times ratio. This new valuation reflects a more optimistic outlook on the company's financial prospects.
The analyst from BofA Securities also suggests that the guidance provided by Okta for the fiscal year 2025 may be overly cautious. This conservative outlook could lead to upward revisions in estimates over the year, which in turn could result in a positive re-rating of Okta's shares.
In summary, the upgraded rating and price target indicate a shift in perception towards Okta's market position and future performance, with BofA Securities expecting the company to navigate past challenges and capitalize on its growth potential in the coming year.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.