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A good analyst remark was received by the firm ahead of tomorrow's results announcement
Okta, Inc. (OKTA) shares rose today on a favourable analyst note from Jefferies, which stated that the risk/reward on the cloud identity software business is compelling right now.
In a note sent this morning, Jefferies analyst Joseph Gallo reduced his price objective for the company from $90 to $80 while maintaining his buy rating. His revised price objective still indicates a near-60% increase in the stock from its closing price yesterday.
Given the low expectations for OKTA's third-quarter earnings announcement tomorrow night, Gallo believes the company is a strong chance to outperform. To take the stock higher, he believes the business only needs to exceed consensus forecasts for Q3 billings growth of 26% and guide to 20%-plus revenue growth in fiscal 2024 with better margins.
OKTA stock dropped substantially following its second-quarter results announcement, as the firm backed away from its long-term expectations, which called for $4 billion in revenue at 20% free cash flow margins in fiscal 2026. The corporation also admitted to blunders in its integration of Auth0, the customer identification software start-up it purchased last May, claiming that it experienced higher attrition in its sales team than anticipated.
Finally, management stated that sales cycles were extending, reflecting the macroeconomic challenges that a number of software firms are facing.
Despite these obstacles, OKTA remains the leader in cloud identity and has a bright development potential ahead of it.
Analysts anticipate a 32.7% increase in sales to $465.3 million for the release of the third-quarter results, as well as an increase in adjusted loss per share from $0.07 to $0.24.
If OKTA can meet those estimates, the software company's shares may rise after falling dramatically this year.
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