Analysts see more upside in Okta stock after a post-earnings rally

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By Senad Karaahmetovic 

Okta (NASDAQ:OKTA) stock could continue to move higher in the coming weeks despite shares already being up over 15% in pre-market Thursday, according to sell-side analysts.

While consensus was looking for Okta to report a $0.24 loss per share for the third quarter, Okta reported flat earnings. Revenue increased by 37% year-over-year to come in at $481 million, beating the consensus estimate of $465.42M. The upside was driven by a 38% jump in subscription revenue to $465.9M, easily ahead of the consensus of $447.1M.

For this quarter, Okta sees EPS in the range of $0.09-0.10, significantly better than the consensus that was looking for a loss of $0.11 per share. Revenue is seen at $489M (up or down $1M), again ahead of the analyst estimate of $487M.

For FY2023, Okta materially raised its EPS guidance to an expected loss of $0.27-0.26 (the prior range was $0.73-0.70), ahead of the consensus of -$0.71. Revenue is expected at $1.84B, up from the prior range of $1.81-1.82B, and higher than the consensus of $1.82B.

BMO analysts see Okta shares beginning to "move in a positive direction."

"While we think Microsoft will continue to serve as an overhang for the multiple, we nevertheless think the multiple is too low at present. Our take is that guidance is very conservative. Hence, even with our estimates moving lower, we are raising our target price to $69, and we retain our Outperform rating," the analysts said in a note.

Mizuho analysts reiterated a Buy rating and a $90 per share price target.

"While we acknowledge that OKTA requires investor patience and that this has clearly become a "show-me" story, we wouldn't lose sight of the fact that OKTA remains a leader in the critically important identity management market. Moreover, we find valuation very compelling at only ~3.5x and 2.5x CY23-24E revenue," the analysts wrote.