Okta (OKTA.US) stock price falls sharply before the market after results, analysts defend prudential guidance

The Zhitong Finance App learned that Okta (OKTA.US), a cloud security company focused on providing authentication and access management solutions, fell 12% before the market on Wednesday. Prior to that, the company announced performance guidelines that were deemed prudent due to “excessive expectations” from investors.

Morgan Stanley maintains Okta's “overweight” rating, with a target price of $123.

Analysts at Morgan Stanley, led by Keith Weiss, said that Okta's indicators for the first quarter exceeded expectations, but guidance for the second quarter and fiscal year 2026 is less optimistic because management has now taken macro-related uncertainties into account. Analysts believe it is reasonable for management to adopt a more balanced strategy and continue to be optimistic about investment opportunities in the field of identity security.

Analysts said that while major customer growth and new product performance are encouraging, management's tone appears to have changed given the potential risks associated with an uncertain macro environment.

Weiss and his team still believe identity security is a top priority for business organizations, and they think Okta is relatively well positioned. However, they pointed out that Okta's recent share price performance (up 33% over the past three months) contributed to “rising expectations.” Should the tone change, it could cause investors to be more hesitant.

Wells Fargo reiterated Okta's “hold” rating, with a target price of $110.

Wells Fargo analysts led by Andrew Nowinski said that despite Okta's steady first-quarter results, its stock price fell because the company's second-quarter results guidance was conservative and far below market expectations.

Analysts added that they have reaffirmed Okta's “hold” rating as subscription revenue growth continues to slow.

Jefferies maintained Okta's “hold” rating, but lowered its price target from $135 to $130.

Jefferies analyst Joseph Gallo and his team said that Okta achieved “healthy results”. The current remaining performance obligation (CrPO) increased 14% year over year, 2% higher than expected median value, but it did not meet “investors' high expectations,” that is, an increase of about 15% year over year.

Analysts added that CrPO guidance for the second fiscal quarter was 1% lower than market expectations, and unexpectedly hinted at the first month-on-month decline in the second quarter since Okta went public. On the positive side, Okta's profit margin exceeded expectations and raised the 2026 free cash flow (FCF) guidance by 1 percentage point to around 27%.