Okta (NASDAQ:OKTA) gained over 4% in pre-open trading Monday after analysts at Goldman Sachs upgraded the stock, saying the risk/reward is now favorable with subscription revenue likely to trough in the 2nd-half.
Analysts upgraded the stock two notches to Buy from Sell and set a $91 price target, offering 27.5% upside to Friday's closing price.
Analysts see outperformance ahead as cRPO and ARR can accelerate back to 15%-20% from 10-15% as, "1) Okta anniversaries headwinds in its Customer IAM business tied to the merging of its organic and acquired product portfolios; 2) The Workforce segment stabilizes post go to market changes and a headwind from macro; 3) Okta ramps on cross-sell tied to new product cycles such as IGA and PAM."
Despite the overhang on the stock from Microsoft (NASDAQ:MSFT) competition, which is factored into their bull case scenario by discounting OKTA valuation by ~30% relative to peers, their latest analysis indicates a 3:1 upside/downside skew to their FY26 (CY25) projections.
Looking at catalysts for the stock, analysts said they believe EPS August 30th "may be the last estimate cut." Next, they consider Okta's PAM launch in 4Q, a trough in cRPO during the 2nd half, and a turning point in subscription growth.