Protecting yourself from hackers is no longer a luxury. It’s a must-have in the digital age, and Okta (NASDAQ:OKTA) is a trusted cybersecurity company with strong growth potential. Okta appears to be closing the gap on profitability, so I’m bullish on OKTA stock, even though the financials aren’t perfect.
Okta is an identity and access management company. I downloaded her Okta app on my phone to work with certain employers. Trust me, the two-way authentication Okta requires is very strict and would make it difficult for a would-be hacker to break into my account.
As you’ll see, OKTA stock has recently garnered several upgrades/price target increases from prominent analysts. Additionally, Okta has far more buy ratings than sell ratings on Wall Street. Overall, we find Okta to be undervalued among investors, but this presents him with an exciting opportunity in 2023.
Okta: A leading cybersecurity provider ignored by many investors
Identity and access management is critical in the 2020s, and Okta is a true leader in cybersecurity. Most recently, Okta launched a software platform called Okta for Global 2000. This is essentially an end-to-end cybersecurity solution for businesses. Okta for Global 2000 allows enterprises to manage the complexities of identity management by centralizing some processes while decentralizing others.
Okta for Global 2000 could be a big revenue generator for the company, but it’s just one product in Okta’s security-focused product lineup. However, OKTA stock is still well below its 2021 high near $300. If investors can understand this hidden gem of a company, there is plenty of room above it.
On the other hand, there are some experts on Wall Street who seem to understand Okta’s true value. For example, Citigroup (New York Stock Exchange:C) Analyst Fatima Boulani raised her price target on OKTA stock from $87 to $90. Meanwhile, Mizuho Securities analyst Greg Moskowitz reiterated his “buy” rating on the stock and raised his price target from $90 to $93. Additionally, Evercore analyst Peter Levin upgraded his rating on Okta stock from “sell” to “hold,” expressing optimism that most of the analysts’ concerns have been resolved.
Could OKTA stock head toward $100?
But what really caught my eye was Goldman Sachs (New York Stock Exchange:GS) Analyst Gabriela Borges reiterated her buy recommendation on OKTA stock and raised her price target for the stock from $91 to $100. This is an ambitious price target, but is it realistic?
In my opinion, the answer is yes. Admittedly, Okta is not a profitable business, but the company seems to be improving in this regard. Specifically, Okta’s quarterly net loss, measured under GAAP, increased from $210 million ($1.34 per share) in the second quarter of 2023 to $111 million in the second quarter of 2024. ($0.68 per share).
On a non-GAAP basis, Okta actually reported second quarter 2024 net income of $0.31. So you could argue that Okta is revenue positive if you choose to measure it this way. The results also beat Wall Street’s expectations for quarterly net income of $0.22 per share.
Looking at Okta’s top-line performance, the company generated total revenue of $556 million in the quarter, up 23% year-over-year and beating TheStreet’s estimate of $534.67 million. So it’s fair to conclude that Okta had a solid quarter and deserves more active attention from passive investors.
What will the future hold for OKTA stock?
At TipRanks, OKTA is rated a Moderate Buy, based on 13 Buy, 10 Hold, and 1 Sell ratings assigned by analysts over the past 3 months. OKTA’s average price target is $92.46, suggesting 9.7% upside potential.
If you’re wondering which analyst to follow if you want to buy or sell OKTA stock, the most accurate analyst covering the stock (over a 1-year period) is TD Cowen’s Scholl Eyle, with an average return of It is 63.16%. The evaluation and success rate is 92%. Click on the image below for more information.
Bottom line: Should you consider OKTA stock?
Analysts generally seem positive about Okta’s prospects. It’s clear that Okta’s products are attractive to businesses seeking more effective and comprehensive cybersecurity solutions.
At the same time, many short-term financial traders don’t seem to fully understand Okta’s intrinsic value and growth potential. That’s exactly why I think investors should consider OKTA stock as a buy-and-hold position.
disclosure