Okta Stock Is Soaring. Wall Street Sees More Upside.

Okta stock surged ahead of the open Thursday as Wall Street rushed to turn more bullish on the software company after its quarterly earnings.

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More than 20 analysts covering the stock hiked their price target following the company’s earnings, and two upgraded their ratings to Buy, according to FactSet data. That gives the stock a Buy rating from 64% the analysts surveyed.

 

Okta OKTA +0.21% ’s (ticker: OKTA) fiscal fourth quarter earnings beat expectations for profit and revenue, while its guidance for the fiscal year 2024 also came in ahead of the consensus. That sent the stock 17% higher to $83.37 in premarket trading. Analysts have an average price target of $88.

 

Guggenheim analysts, led by John DiFucci, raised their price target on the stock to $90 from $80, reiterating a Buy rating. “CEO Todd McKinnon said several times on the quarterly conference call that the company is trying to keep it simple–beat and raise is the simple way to describe these results,” they said.

 

Despite guiding above expectations, DiFucci said next year’s revenue guidance “still sets a low bar”, adding that Okta can “do better in a plausible scenario.”

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RBC Capital Markets analysts also said there was room to beat the updated guidance. “Full year 2024 revenue guidance moved higher in absolute terms, though looks conservative as we see upside as likely with a potential to re-accelerate growth in FY25,” they said. They hiked their price target to $100 from $95.

 

D.A. Davidson analysts hiked their price target to $80 from $60 but maintained a Neutral rating.”The FY24 guidance appears conservative and achievable,” they said, but noted that some risks remain, including macro uncertainty.

 

Not everyone is bullish, though, as Evercore ISI analysts kept their Underperform rating on the stock, citing execution risk for the fiscal year 2024. They have a price target of $65.

 

Okta reported revenue of $510 million in the fourth quarter ending Jan.31, beating the Wall Street consensus of $489 million. Adjusted earnings of 30 cents a share also beat expectations for 9 cents a share.

 

For the April quarter, the first quarter of fiscal year 2024, Okta expects revenue of $509 million to $511 million, also ahead of the analysts’ consensus for $507 million. The company sees full year revenue of $2.16 billion to $2.17 billion.

 

In an interview with Barron’s, CEO Todd McKinnon said Okta is making increasing progress on selling its customer identity software business—he expects the company will eventually get to a 50/50 split with its legacy employee identity management software.

 

He noted that one new customer is ChatGPT, the widely popular chatbot from OpenAI, which uses Okta software for the login process for the application.

 

Sources [BRRON'S]

 

 

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