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Okta stock surges more than 25% as analysts agree on company’s profit target


Shares of Okta Inc. surged more than a quarter in value on Thursday after analysts praised the recognition software company for being on track after promising a profitable 2024 fiscal year after a volatile year.

Okta
OKTA,
+26.46%

shares jumped more than 26% to $67.27 in Thursday trading, though shares are still down 70% for the year. The company’s report came as a relief after a year in which it had to overcome not only sales force difficulties but also an attack nicknamed “Oktapus”.

At the end of Wednesday, The company not only reported a strong quarter, but also forecast earnings on an adjusted basis for the fourth quarter and fiscal year 2024. Over the course of the quarter, the company’s strongest driver of profitability was the company’s profitability. refocusing the sales force, got one that worked out of it $6.5 billion acquisition of identity platform Auth0 (pronounced “Auth Zero”), closed in May.

Before the call with analysts, Okta CEO and co-founder Todd McKinnon told MarketWatch that there was confusion about what products to sell to customers and when. He noted that the company is taking steps to refocus sales. Okta primarily makes software that helps authorized employees access applications on their corporate network.

McKinnon also told MarketWatch that he will publish an outlook promising a profitable fiscal year 2024 (Okta limits his fiscal year — currently fiscal 2023 — to the quarter ending in January), even when there are macroeconomic difficulties.

“We’re thinking about a pretty conservative assumption that the macro is going to get worse before it gets better, so that’s certainly included in the guidance,” McKinnon told MarketWatch.

On Thursday, Jefferies analyst Joseph Gallo, who has a buy rating and $80 price target for the stock, called the report “Sunshine in this dismal earnings season.”

“We don’t underestimate the work ahead, but Okta has a clearer vision and these results should allay fears about competition,” Gallo said.

Many analysts worry that larger software companies like Microsoft Corp.
MSFT,
-0.18%

is eating into Okta’s market share, especially in the SME category.

In a note titled, “Efficiency breaks through low barriers and ultimately accelerates profits, with some surprises in 2024,” Citi Research analyst Fatima Boolani said she still holds. intact its neutral rating on the stock, which is “likely to see a slight bounce on better/cleaner results and ‘sink in the kitchen’ guidance.

According to one guide, Boolani mentioned the lack of any financial goals for 2026 although she called the 2024 outlook “surprising”. The Citi analyst also said Okta did a great job in controlling costs and hiring, which prompted a “significant” change in profit.

Of the 33 analysts surveyed by FactSet, 20 have buy ratings, 11 have hold ratings, and two have sell ratings. Of those, 10 lowered their price targets, while six raised them, resulting in an average target price of $77.04, compared with $77.79 previously, according to the data. FactSet data.

In November, cloud software stock fell sharply but recovered a bit at the end of the month. While the S&P 500
SPX,
-0.09%

up 5.4% and the Nasdaq Composite Index
COMPUTER,
+7.36%

up 4.4% in November, iShares Expanded Tech-Software Sector ETF
IGV,
+1.11%

up 1.6%, Global X Cloud Computing ETF
CLOUD,
+2.21%

up 0.8%, First Trust Cloud Computing ETF
SKY,
+1.74%

2% off and WisdomTree Cloud Fund
WCLD,
+2.96%

down 6.9%.

For the year, the S&P 500 is down 15%, Nasdaq is down 27%, IGV is down 31%, CLOU is down 36%, SKYY is down 39% and WCLD is down 49%.

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