Okta Stock Is Sliding Down, Despite 6 Analysts' Mixed Takes on Q2 Earnings, Guidance

Zinger Key Points
  • Sales integration and execution challenges led to a disappointing outlook, one analyst said.
  • Another analyst mentions the company faces "significant opportunity for the CIAM market."

Shares of Okta Inc OKTA fell in after-hours trading, despite the company reporting a lower-than-expected loss for the second quarter.

JMP Securities On Okta

Analyst Trevor Walsh reiterated a Market Outperform rating while reducing the price target from $165 to $145.

“The stock traded down ~11% during the aftermarket due to management's reported sales integration challenges and heightened employee attrition leading to a disappointing FY23 outlook,” Walsh said in a note.

“We are lowering our price target on the basis of near-term sales integration and execution challenges between Auth0 and Okta,” he added.

The analyst stated, however, that he continued to like Okta, given that “the revised go-to-market plan for CIAM should simplify product positioning and help address the sales enablement to capitalize on the significant opportunity for the CIAM market” and the company’s “resilient management team, with a vision to build out a single identity platform with the recent release of its IGA solution and 1HFY23 PAM limited release.”

Needham On Okta

Analyst Alex Henderson downgraded the rating from Buy to Hold.

Okta reported strong quarterly results but noted “added headwinds around the integration of Auth0, higher than expected Sales attrition and accelerating macro headwinds,” Henderson said in the downgrade note.

“The full-year guide is increasing less than the upside in FY2Q'23 implying a weaker than modeled FY4Q,” the analyst stated. “With management changes, sales attrition and integration challenges into an eroding macro, we are retreating to a Hold on OKTA,” he added.

Raymond James On Okta

Analyst Adam Tindle maintained a Market Perform rating.

Okta’s quarterly results were strong “on most metrics,” Tindle said. He added, however, that the forward guidance “cuts Billings by nearly $300M annualized (-13% vs. prior), and cRPO growth (key forward revenue growth indicator) is now near 30%.”

“These important forward growth metrics are decelerating alongside a newly announced salesforce reorganization that will change organizational and compensation structures, and our fears around a disjointed go-to-market that we flagged with our 4Q21 checks and subsequent downgrade have come to fruition,” he added.

Check out other analyst stock ratings.

Stephens On Okta

Analyst Brian Colley reiterated an Overweight rating and a price target of $145.

“OKTA added 600 net new total customers (vs. 800 in 1Q23), with 220 new >$100K ACV customers (vs. 205 in 1Q23),” Colley wrote in a note. “OKTA only raised FY23 sales guidance by 0.3%/$6M ($17M less than the 2Q beat) and lowered billings' guidance by 6%,” he added.

Mizuho Securities On Okta

Analyst Gregg Moskowitz reaffirmed a Buy rating while reducing the price target from $150 to $110.

Okta’s results were mixed, with 43% year-on-year total revenue growth and better-than-expected margins, Moskowitz said in the note. “A retooled GTM strategy could pay dividends, but will take time. We are disappointed by the results/outlook,” he added.

Morgan Stanley On Okta

Analyst Hamza Fodderwala downgraded the rating from Overweight to Equal-Weight, while lowering the price target from $150 to $93.

“The recent sales execution issues and ongoing challenges with respect to integrating the Auth0 acquisition from last year leave the company without an effective GTM vehicle, which will take time to recover,” Fodderwala wrote in the downgrade note.

He added that there was “limited visibility into the path and timeline for recovery.”

OKTA Price Action: Shares of Okta had tanked 33.70% to $60.60 at market close Thursday.

Photo: II.studio via Shutterstock

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Posted In: Analyst ColorEarningsNewsDowngradesPrice TargetReiterationAfter-Hours CenterAnalyst RatingsMoversTrading IdeasAdam TindleAlex HendersonBrian ColleyGregg MoskowitzHamza FodderwalaJMP SecuritiesMizuho SecuritiesMorgan StanleyNeedhamRaymond JamesStephensTrevor Walsh
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