Okta Stock Can Move In Positive Direction Despite Challenges, Analysts Say

Needham analyst Alex Henderson maintained a Hold on Okta, Inc OKTA Okta's shares rallied after the close on a solid 3Q print and 4Q guide. However, the company also called out a material weakening of conditions, particularly in SMBs, and new customers in the pipeline. 

Okta noted a material erosion in conditions over the last quarter and called its guide "careful." Okta is also sharply slowing hiring to provide operating leverage in FY24.

Okta hopes to drive Sales productivity gains in CY23, but the slow staffing growth suggests slower growth in FY25. 

BMO analyst Keith Bachman reiterated Outperform and raised the price target to $69 from $58. While it has been a long and challenging journey, he thinks Okta's stock can begin to move in a positive direction. 

While Microsoft Corp MSFT will continue to serve as an overhang for the multiple, the numerous are too low. The guidance is very conservative. Hence, even with his estimates moving lower, he re-rated the stock, Bachman wrote.

RBC analyst Matthew Hedberg maintained Outperform and raised the price target to $80 from $70. Okta delivered solid results ahead of expectations, while FY23 guidance moved slightly higher. 

While macros continued to worsen, results benefited from better sales execution and success with more significant deals. 

Preliminary FY24 guidance was provided and lower than expectations, though conservative, as he thinks it creates an attractive setup for upside in FY24 and likely a re-acceleration in FY25.

Mizuho analyst Gregg Moskowitz reiterated a Buy with a $90 price target. Following a very weak 2Q, OKTA executed much better.

While OKTA requires investor patience and it has become a "show-me" story, Moskowitz wouldn't lose sight of the fact that OKTA remains a leader in the critically important identity management market. Moreover, the valuation is very compelling, Moskowitz said. 

Raymond James analyst Adam Tindle maintained Market Perform. He re-rated after 3Q results that featured slightly less upside to the midpoint of growth metrics. Still, a more significant upside to profitability metrics as Okta transitioned to a new era. 

Tindle previously suggested that a sales leadership change may make sense at this point, which has now come to fruition with the departure of Susan St. Ledger. Forward guidance carries this trend.

Price Action: OKTA shares traded higher by 24.5% at $66.36 on the last check Thursday.

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