On Thursday, DA Davidson maintained a neutral stance on Okta, Inc. (NASDAQ:OKTA), with a consistent price target of $100.00. The company reported revenue growth of 19% year-over-year, surpassing its initial first-quarter guidance of 16-17%. Additionally, the calculated remaining performance obligations (CRPO) grew by 15% year-over-year, which also exceeded the company's expectations of 13%.
The firm noted that Okta's second-quarter guidance, as well as the revised full-year 2025 guidance, suggest a conservative estimate that may lead to further upside. Despite the positive performance in profitability and free cash flow, DA Davidson believes that the stock is adequately priced at approximately 6 times enterprise value to the calendar year 2025 revenue.
The analyst from DA Davidson pointed out that although Okta has been surpassing its own guidance, the growth is anticipated to slow down to the low double-digit range by the end of the year. The firm's position reflects a view that the growth deceleration and the overall balance of growth and profitability are already factored into the current stock valuation.
Okta's recent financial achievements indicate a strong operational performance, especially in the context of their conservative forecasts. The company's ability to consistently outperform its guidance has been a highlight in the recent quarters.
In summary, DA Davidson's reiteration of a neutral rating with a $100 price target on Okta underscores the firm's assessment of the company's performance relative to its valuation. While Okta's financial results have been robust, the projection of a slowdown in growth and the current stock price have led to a cautious outlook from the analyst firm.
InvestingPro Insights
Okta, Inc. (NASDAQ:OKTA) demonstrates a noteworthy financial landscape, with real-time data from InvestingPro showcasing a robust growth trajectory. The company holds a market capitalization of $16.21 billion, reflecting its substantial presence in the industry. Investors have seen a significant revenue increase, with the latest figures revealing a 21.8% growth over the last twelve months as of Q4 2024, and a gross profit margin impressively standing at 74.33%. Despite a negative P/E ratio of -44.57, indicating that the company has been operating at a loss, the expectation of net income growth this year offers a positive outlook on profitability.
InvestingPro Tips highlight Okta's strong cash position, holding more cash than debt, which could provide financial flexibility and resilience. Additionally, 33 analysts have revised their earnings upwards for the upcoming period, signaling confidence in the company's future performance. It's important to note, while Okta does not pay dividends, the company has experienced a large price uptick over the last six months with a 43.71% return, which may appeal to growth-focused investors.
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