Okta: Bullish Signals Suggest a Market Reversal Is Underway

Key Points

• Okta had a solid quarter and raised guidance significantly, sparking a robust response from analysts. 
• At least 20 analysts have reaffirmed or raised their price target, and some are upgrading the stock, pointing to a double-digit price increase in 2025. 
• The price action in Okta stock hit bottom and is now on track to complete a reversal and trend higher. 

Okta’s NASDAQ: OKTA share price has suffered since the peaks set in 2021, but those days are over. The cyber security company has gained traction over the past two years, and the Okta stock market normalized after its bubble burst. Today’s takeaway is that the CQ3/FQ2 2025 results sparked a high-volume movement, signaling support at a critical level, confirming the market bottom, and a high likelihood it will continue to move higher and confirm a complete reversal. The daily and weekly charts show some resistance to higher prices, but the overall signal is very bullish. It shows support at a pair of moving averages, a golden crossover in the EMAs, convergence and bearish crossovers in the technical indicators, and near-record volume. 

Okta: Beat and Raise Quarter Impresses the Analysts 

Okta had a solid quarter, with large customers and public and private businesses contributing to growth. The company reported $665 million in net revenue, up 14% year over year, driven by a 14% increase in subscriptions. The revenue outpaced MarketBeat’s reported consensus by 230 basis points and is compounded by wider margins, leveraged bottom-line results, and robust guidance. RPO, an indicator of future growth, grew by 19%, with nearly 14% expected to be recognized in the next 12 months. 

The margin news is more impressive, with gross and operating margins improving compared to last year. The company continues to post GAAP losses, but the loss narrowed significantly, putting the company on track for GAAP profits soon. The adjusted operating margin, which is important because of cash flow, was widened by 600 basis points to drive robust cash and free cash flow, about 23% of the revenue. 

The report's most impressive detail is the guidance. The company guided for strength in Q4 and the year relative to the consensus, putting the low end of the revenue and EPS range well above the analysts' forecast. The Q4 EPS is expected to be more than 500 basis points above the pre-release consensus, but the company may be cautious with its estimates. Security is a priority for businesses, institutions, and organizations globally and is only becoming more so as the pace and severity of attacks increase. 

The Analysts Heap Praise on Okta After Solid Guidance

The analysts are overwhelmingly bullish in their response to the news, showering it with price target increases and at least one upgrade. The 20 updates tracked by MarketBeat include a few reiterated price targets but a sufficient number of increases to lift the consensus by nearly 500 basis points overnight. The revision trend shows a high conviction in the belief that this stock will trade above $100, which is good for a minimum gain of nearly 20% from critical support levels. The trend suggests the market will move into the high-end range within twelve months, adding another 35% to 40% to the stock price. The takeaway from the chatter is that Okta’s improved execution drives results in the face of economic headwinds, new products are expected to drive growth in the long term, and the growth trajectory is good. 

The institutional activity also supports Okta’s stock price in CQ4. The institutions own more than 85% of the stock and have bought on balance every quarter of 2024. Their activity aligns with the market bottom and support at the 150-day moving average. The stock price above that average indicates it can trend higher in 2025. The critical resistance level is near the $100 mark and may be tested soon. A move above $100 is another bullish signal that could trigger an inflow of fresh capital. In that scenario, the market could quickly move up to the analysts' high-end range.