Okta
stock surged Thursday as markets and analysts cheered the security software company’s solid results and upbeat outlook.
BofA Global Research made a rare double upgrade to Buy on the stock as well.
After the market closed Wednesday,
Okta,
which secures customer logins, projected a revenue range with a midpoint of $2.5 billion for the fiscal year ending January 2025. That was ahead of the management’s previous forecast and more than the Wall Street consensus of $2.48 billion, according to
FactSet.
Despite a serious security breach late last year, CEO Todd McKinnon told Barron’s that demand from larger customers remains robust. He also said the company isn’t seeing a “spending fatigue” comparable to what
Palo Alto Networks,
another security firm, described last week.
Okta stock surged 22% to $105.87 in recent trading Thursday, putting it pace for the largest one-day percent increase since December 2022. It closed at $87.30 on Wednesday.
BofA’s
Madeline Brooks is the most optimistic on the stock’s trajectory, FactSet data show.
She boosted her rating on the stock Thursday all the way to Buy from Sell. Her price target roughly doubled to $130, the highest estimate among analysts so far. Brooks, in her note, wrote her key concerns around new customer growth, and saturation among the existing base have been lessened.
At least six other sell-side research firms have raised their price targets for the stock after the results.
Needham’s Alex Henderson kept a Buy rating but raised his price projection to $130 from $105 on Thursday. That implies stock gains of about 20% from current levels.
Henderson sees Okta’s fiscal 2025 guidance as conservative and said the market will assign a higher enterprise value-to-sales valuation.
Guggenheim’s John DiFucci, with a Buy rating, raised his target to $120 from $110. The new target takes into account management’s higher guidance for free cash flow margin: Okta now expects 21% of its revenue will translate into free cash flow in fiscal 2025, up from 19%.
Overall, no analysts tracking Okta’s stock recommend selling it, 60% are on Hold, while 40% rate it as Buy, according ti FactSet.
Okta reported 63 cents in adjusted earnings for the fiscal fourth quarter ended in January on revenue of $605 million. Wall Street’s consensus was for 51 cents a share on revenue of $587 million.
Write to Karishma Vanjani at [email protected].
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