Okta stock has a bright future after receiving positive feedback from some of the software company’s customers,
Analyst Adam Borg raised his rating for shares of
) to Buy from Hold and increased his price target to $90 from $60. The upgrade comes after Stifel surveyed Okta’s customers.
The company’s software allows companies to manage and authenticate user identification for services and applications across multiple devices
Our “survey results reveal generally happy customers who support Okta’s broader identity…strategy and are interested in Okta’s emerging [product] opportunities,” he wrote. “We expect Okta to deliver meaningful operating margin and FCF margin expansion in coming years.”
In midday trading Monday, Okta was down 1.3% to $70.42. The
Dow Jones Industrial Average
were off as well—0.8% and 0.2%, respectively.
Borg said about 90% of the Okta customers surveyed were satisfied with the company’s services. He also said customers were excited about Okta’s move into the privileged access management space that allows companies to set different access levels for workers.
Borg believes Okta’s stock valuation is attractive after its 60% drop over the past 12 months. He noted the stock is trading at about 5 times enterprise value to estimated revenue for 2024, versus the 6 times average for its industry peers.
We believes this valuation “creates a positive set-up and risk/reward as Okta steadies [its] execution,” he wrote.
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