Okta’s Stock Reversal Gains Momentum—20% Upside Ahead

Key Points

• Okta turned a corner in 2024 and is on track to sustain double-digit growth in 2025 and 2026.
• Cash flow and profitability are improving, allowing the company to improve its financial condition and build shareholder value.
• Analysts are raising targets after the 2025 guidance update and indicate a 20% to 40% upside by the end of 2025. 

It has been years in the making, but the market for Okta’s NASDAQ: OKTA stock is turning a corner, and a 20% upside is possible. The critical details for 2025 are that the 2023 security breach is behind it, growth is solid, the outlook is improving, and the analysts are raising their price targets. Themes from their chatter include Okta stepping in the right direction and taking advantage of opportunities to grow and scale its cybersecurity business.

The company also shows momentum within its channels, with bottom-line results aided by productivity efforts and new products expected to improve penetration and mix. 

The analysts' activity tracked by MarketBeat includes 17 revisions from 32 analysts, including two upgrades and 16 price target increases. The takeaway is that the Moderate Buy rating is firming, the bias is bullish, and a full-blown Buy rating is just around the corner.

At the same time, the price target is rising, up 750 basis points overnight following the Q4 2024 release and 2025 guidance update, and indicates a minimum of 10% upside with most targets above consensus. The high-end range of fresh targets puts Okta stock in the $120 to $140 price range or 20% to 40% upside from the critical support targets, the 150-day EMA. 

Okta’s Beat-and-Raise Quarter Lifts Sentiment

Okta had a solid quarter with growth of 12.7%, outperforming the consensus estimate by 200 basis points. The gain was driven by 13% growth in the core subscription channel, supported by client growth and penetration. More importantly, the remaining performance obligation or RPO and current RPO are accelerating, suggesting strength will continue in upcoming quarters.

Other significant details include margin gains, record profitability, and outperformance on the bottom line. The adjusted $0.78 beat by $0.04, outpacing top-line strength by nearly 350 basis points to reveal clear operational strength. 

Guidance is critical to the stock price reversal. The company issued wow-quality guidance with the low-end range for Q1 and full-year revenue and earnings well above the consensus figures. The company forecasts a 9.5% top-line growth this year, about 200 bps above the consensus, and there is an expectation for outperformance.

Okta is known to issue cautious guidance and has outperformed its top and bottom-line consensus estimates 100% of the time since its IPO in 2017. If that trend continues in 2025, the odds are high that analysts' sentiment trends will continue to be firm and drive its stock price higher.

Okta Institutional Buying Ramps Higher in Q1 2025

Institutional activity is a noteworthy factor for Okta investors this year. Institutional activity was bullish on balance every quarter of 2024, and buying activity ramped higher at the year’s end. Buying activity remains bullish in Q1 2025 and ramped to a new multiyear high, netting nearly $1.3 billion of shares. The buying spree has institutional ownership above 86%, and it is likely to rise, given the 2025 guidance. 

Okta’s operational quality is central to institutional interest. The company’s cash flow allows it to invest in growth while paying down debt and maintaining a fortress balance sheet, a path to future capital returns. Highlights at the end of 2024 include increased cash, current, and total assets compounded by reduced debt and total liability. Shareholder equity rose nearly 900 bps.

Okta Moves Above Critical Resistance Point, The 150-Day EMA

Okta’s price surged more than 15% following the guidance update to move above the 150-day EMA. This is a critical move because it signifies a shift in market sentiment in alignment with analysts and institutional trends. The market still faces potentially strong resistance at the $112 level but will likely move above it. The market for this stock could rise to the analysts’ high-end target range in that scenario, the next target for significant price resistance.