On Wednesday, BTIG analyst Gray Powell increased the price target for Okta, Inc (NASDAQ:OKTA) to $110.00 from the previous $98.00, while reiterating a Buy rating on the stock. Currently trading at $81.71, InvestingPro analysis suggests the stock is undervalued. The adjustment follows Okta's release of fiscal third-quarter results, which exceeded analyst expectations and provided a fourth-quarter outlook that was also above forecasts.
Okta reported a current remaining performance obligation (CRPO) of $2.30 billion, marking a 12.9% year-over-year increase for the third quarter of fiscal year 2025. This figure significantly surpassed both BTIG's estimate of $1.99 billion and the consensus estimate of $1.988 billion. The company's performance, including operating income and free cash flow, also notably exceeded expectations, supported by impressive gross profit margins of 75.82% and strong revenue growth of 18.74% over the last twelve months.
For the fourth quarter of fiscal year 2025, Okta has projected a CRPO of approximately $2.132 billion, representing a 9.2% year-over-year increase, which stands above BTIG's prior estimate of $2.11 billion and the street's $2.12 billion. Additionally, Okta has offered a preliminary forecast for fiscal year 2026, anticipating a 7% revenue growth, aligning with BTIG's and buy-side analysts' projections.
Powell highlighted Okta's strong quarter amidst a challenging earnings season for security software companies. He noted that the company's results were particularly commendable given the broader lackluster performance in the security sector this quarter.
According to InvestingPro, Okta maintains a "GOOD" overall financial health score, with particularly strong growth metrics. Okta's recovery from the breach incident in October of the previous year and its progress in new product categories, such as Identity Governance and Privileged Access Management (OIG and PAM), as well as an uptick in large deal momentum, were emphasized as positive indicators.
In light of these developments, BTIG has made slight adjustments to its financial model for Okta, increasing revenue estimates for fiscal years 2025 and 2026 by approximately 1%. The firm's renewed confidence in Okta's performance and prospects is reflected in the raised price target and the maintained Buy rating.
For deeper insights into Okta's valuation and growth potential, InvestingPro subscribers can access the comprehensive Pro Research Report, which includes detailed analysis of the company's financial health, growth prospects, and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.