RBC cuts Okta stock price target to $135, maintains Outperform

RBC Capital Markets lowered its price target on Okta (OKTA) to $135 from $143, maintaining an Outperform rating, after the company reported Q1 results with a 14% cRPO growth, exceeding its 12% guidance. While FY26 guidance remains unchanged, the price target reduction reflects lowered FY27 estimates due to perceived macroeconomic uncertainties despite Okta not currently experiencing macro pressures; multiple other firms adjusted their price targets with mixed ratings, reflecting a cautious optimism amid broader economic concerns.

Analysis

RBC Capital Markets has revised its price target for Okta, Inc. (NASDAQ:OKTA) to $135.00 from $143.00, while maintaining an Outperform rating, following the company's recent quarterly results. Okta reported a positive 14% growth in calculated remaining performance obligations (cRPO), surpassing its own 12% guidance, and continues to exhibit strong financial fundamentals with gross profit margins of 76.3% and revenue growth of 15.3% over the last twelve months. Despite these strong current metrics and a 64% stock price gain over the past six months, the price target reduction by RBC reflects lowered fiscal year 2027 estimates. Okta's guidance for fiscal year 2026, while unchanged or slightly higher, now incorporates potential macroeconomic uncertainties, even as the company reports not currently experiencing direct macro pressures. RBC analyst Matthew Hedberg noted that Okta is progressing as anticipated and gaining traction with its go-to-market strategy changes, suggesting the market might have misinterpreted the lower cRPO guidance for Q2 fiscal year 2026. Other analyst actions are mixed but lean towards cautious optimism: BMO Capital adjusted its target to $132, KeyBanc to $140 (Overweight), Bernstein maintained $132 (Outperform), and Loop Capital $140 (Buy), while Piper Sandler held a Neutral rating at $110, citing the smallest revenue beat in Okta's history. This collective sentiment underscores a period where Okta's robust operational performance is weighed against a conservative outlook due to the broader economic environment, although InvestingPro's analysis indicates a GOOD overall financial health score for the company.

Key Decisions for Investors

• Investors should carefully weigh Okta's strong current operational performance, evidenced by its 14% cRPO growth and high gross margins, against the cautious forward-looking guidance and downward price target revisions from some analysts, which reflect anticipated macroeconomic uncertainties and lowered fiscal year 2027 estimates.
• Monitor upcoming cRPO figures, management commentary on the effectiveness of its go-to-market strategy, and any signs of emerging macroeconomic pressures, as these will be critical in assessing the sustainability of Okta's growth trajectory.
• Given the stock's significant 64% appreciation over the past six months, consider whether the current valuation appropriately balances the long-term growth potential, as highlighted by firms like RBC, with the prevailing cautious sentiment and revised future estimates from the analyst community.