Okta's Stock Faces Setback Amid Growth Concerns

Published 3 days agoOKTA

Okta's Stock Faces Setback Amid Growth Concerns

Okta's stock has recently hit a roadblock after enjoying a sharp rally, primarily due to apprehensions about future growth. Analysts have taken a cautious stance, with Piper Sandler reducing its price target to $85 from $100 while retaining a Neutral rating. DA Davidson meanwhile raised the target to $90 from $75 on solid third-quarter performance, yet echoed concerns about slowing growth. Wells Fargo also revised its price target downward to $90 from $100 following modest growth expectations in Okta's CRPO guidance.

In the second quarter of fiscal 2025, Okta reported a 16% increase in revenue, reaching $646 million, with a notable 17% rise in subscription revenue. The company's calculated remaining performance obligations rose 13% year-over-year to exceed $1.995 billion, slightly outperforming analysts' predictions. Despite these positive figures, Okta's net dollar retention rate dipped to 110%, suggesting potential challenges in enhancing customer relationships.

The stock's performance this year reflects these concerns, with Okta experiencing a roughly 20% decline year-to-date, lagging behind the broader technology sector. Although some analysts see the recent price drop as indicative of the stock being overvalued due to decelerating growth, the 17% increase in subscription revenue and solid third-quarter financials keep investors on their toes about future potential.

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