Protecting against hackers isn’t a luxury anymore. It’s a necessity in the digital age, and Okta (NASDAQ:OKTA) is a go-to cybersecurity firm with strong growth potential. I am bullish on OKTA stock even though the financials aren’t perfect, as Okta appears to be closing the profitability gap.
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Okta is an identity and access management company. I’ve downloaded the Okta app on my phone in order to work with certain employers. Believe me, the two-way authentication that Okta requires is quite strict, and would-be hackers would have a tough time breaking into my account.
As we’ll see, OKTA stock recently earned a few upgrades/price-target raises from prominent analysts. Additionally, Okta has many more Buy ratings than Sell ratings on Wall Street. All in all, you might find that Okta is underappreciated among investors, which presents an exciting opportunity in 2023.
Okta: a Premier Cybersecurity Provider that Many Investors are Ignoring
Identity and access management is crucial in the 2020s, and Okta is truly a leader in the cybersecurity space. Just recently, Okta launched a software platform called Okta for Global 2000, which is basically an end-to-end cybersecurity solution for businesses. Okta for Global 2000 enables businesses to centralize some processes while decentralizing others, as well as manage the complexities of identity management.
Okta for Global 2000 could prove to be a major revenue generator for the company, and that’s just one product in Okta’s lineup of security-focused offerings. Yet, OKTA stock remains far below its peak price from 2021 of nearly $300. There’s plenty of headroom above if only investors could learn to appreciate this hidden gem of a company.
On the other hand, there are experts on Wall Street who seem to understand Okta’s true value. For example, Citigroup (NYSE:C) analyst Fatima Boolani raised the firm’s price target on OKTA stock from $87 to $90. Meanwhile, Mizuho Securities analyst Gregg Moskowitz reiterated a Buy rating on the stock and lifted his price target on the shares from $90 to $93. Furthermore, Evercore analyst Peter Levine upgraded Okta shares from a Sell to a Hold rating while expressing optimism that most of the analyst’s concerns have been addressed.
Could OKTA Stock be Headed for $100?
What really caught my eye, however, was when Goldman Sachs (NYSE:GS) analyst Gabriela Borges reiterated a Buy recommendation on OKTA stock and raised her price target on the shares from $91 to $100. That’s an ambitious price objective, but is it realistic?
I would say that the answer is yes, in my opinion. Admittedly, Okta isn’t a profitable business, but the company appears to be improving in this regard. Specifically, Okta’s GAAP-measured quarterly net loss improved from $210 million ($1.34 per share) in the second quarter of Fiscal 2023 to $111 million ($0.68 per share) in the second quarter of Fiscal 2024.
On a non-GAAP-measured basis, Okta actually reported net income for Q2 FY2024 of $0.31. Thus, it could be claimed that Okta is income-positive if you choose to measure it this way. Also, this result beat Wall Street’s call for quarterly net income of $0.22 per share.
Looking at Okta’s top-line results, the company generated total revenue of $556 million for the quarter, up 23% year-over-year and above the Street’s estimate of $534.67 million. Hence, it’s fair to conclude that Okta had a solid quarter and deserves more positive attention from reluctant investors.
What is the Future of OKTA Stock?
On TipRanks, OKTA comes in as a Moderate Buy based on 13 Buys, 10 Holds, and one Sell rating assigned by analysts in the past three months. The average OKTA stock price target is $92.46, implying 9.7% upside potential.
If you’re wondering which analyst you should follow if you want to buy and sell OKTA stock, the most accurate analyst covering the stock (on a one-year timeframe) is Shaul Eyal of TD Cowen, with an average return of 63.16% per rating and a 92% success rate. Click on the image below to learn more.
Conclusion: Should You Consider OKTA Stock?
Analysts seem to be generally positive about Okta’s future prospects. Clearly, Okta’s products appeal to businesses seeking more effective and comprehensive cybersecurity solutions.
At the same time, many short-term financial traders don’t seem to fully appreciate Okta’s intrinsic value and growth potential. That’s exactly why I believe investors should consider OKTA stock for a buy-and-hold position.
