Okta stock outlook: Guggenheim sees a 45% upside

on Nov 7, 2022
  • Guggenheim says Okta stock is a buy with upside to $65 a share.
  • Analyst John DiFucci says Okta is trading below its intrinsic value.
  • Shares of the cloud company are at their year-to-date low today.

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Okta Inc (NASDAQ: OKTA) is trading at its year-to-date low on Monday – a valuation that’s “too compelling to ignore”, as per a Guggenheim analyst.

Okta stock upgraded to ‘buy’

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John DiFucci upgraded the identity management company this morning to “buy” and announced a price objective of $65 that represents about a 45% upside on its previous close.

Okta is currently trading at 3.6 times the EV-to-NTM recurring revenue. In comparison, its rivals – Ping Identity and ForgeRock, the analyst wrote, were acquired at 8.2 times and 8.9 times, respectively.

While our upgrade isn’t necessarily based on potential of a similar outcome for Okta (although we recognise the possibility), we see current levels offering asymmetrical risk-reward with little downside and significant upside potential.

Down 85% versus its all-time high in February 2021, Okta stock is trading below its intrinsic value, he added.

Headwinds are already priced in

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Okta is expected to report its Q3 results on December 7th. Consensus is for its per-share loss to remain unchanged sequentially at $1.34 (read more) and up meaningfully from last year’s $1.08.

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In other words, the Nasdaq-listed firm is expected to remain significantly in loss – in line with several other cloud stocks that have already reported disappointing third quarters on macro headwinds.

Still, the Guggenheim analyst continues to see a massive opportunity for Okta Inc, over the long term, in its core identity and access management space. He also noted:

Okta is more than pricing in issues surrounding salesforce attrition, product delays, C-suite turnover, and negative headlines concerning security incidents.

Okta is scheduled for an Investor Day next week.


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