Okta, Inc (OKTA) PT Lowered to $110 at DA Davidson: 'Risk/Reward Attractive'

DA Davidson analyst Rudy Kessinger lowered the price target on Okta, Inc (NASDAQ: OKTA) to $110.00 (from $140.00) while maintaining a Buy rating.

The analyst commented, "Extra conservatism for GTM specialization was removed from FQ4 guidance, but some conservatism around macro conditions & typical FQ4 conservatism given it's the seasonally largest bookings qtr. of the year remained. CRPO guidance, which requires just +5% Q/Q growth at the high end vs. +7-9% Q/Q in FQ4 the last three years, still seems to leave room for meaningful upside. Given stable to slightly improved net sales performance in our FQ4 channel survey, continued improvements in sales rep attrition, and our belief that sales productivity levels will see further improvement, we're still expecting $2.5B+ in CRPO vs. guidance of $2.445 - $2.45B. Last qtr., mgmt. indicated a ~79% CRPO / NTM Subs. Rev coverage ratio was a good way to model FY27. We believe they will use a similar ratio when setting initial FY27 Revenue guidance. If we apply that to the $2.5B+ of CRPO that we expect in FQ4, it would translate to initial FY27 Revenue growth guidance of ~11%+ Y/Y vs. cons. of +9% Y/Y. We believe all the above is about what the investor expectation is & it will likely take early signs of growth reacceleration to drive a meaningful re-rating higher. We believe growth reacceleration is increasingly likely by 2H'FY27 given continued improvements in sales execution, meaningful sales capacity expansion, and more, and we would thus continue to accumulate shares at current levels as risk/reward remains attractive in our view (trading at ~12.5x EV/FY27 FCF vs. mid-teens growth peers at ~19-20x; $110 PT = 20x."

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