By Elsa Ohlen
Okta stock fell sharply as fears over an increasingly gloomy macroeconomic outlook overshadowed an earnings beat late Tuesday.
Shares fell 11% to $111.71 in premarket trading Wednesday. Futures tracking the S&P 500 were up 0.1%.
While some analysts lowered their price targets by various amounts following the earnings report, some still see the stock as a buy. Their thinking is that management are being over cautious by maintaining full-year guidance rather than raising it, especially since macro uncertainty didn't affect results materially in the reported quarter .
If macro conditions in the April quarter remain unchanged into the coming quarters, an upside to the stock is very likely, D.A. Davidson analysts led by Rudy Kessinger said. If so, the guidance growth will continue to look conservative in light of recent growth, they added as they reiterated a Buy-rating on shares but lowering price target to $140 from $145.
In its earnings report the cloud-based software provider which specializes in identity-access had said it is taking a "prudent approach" to its guidance. It's now factoring in potential risks related to the uncertain economic environment for the remainder of the year.
"[It's] just a feeling in the environment," CFO Brett Tighe told analysts in an earnings call Tuesday afternoon. "I don't have a lot of quants to back up what I'm saying, it's more based on customer conversations, reading the news, talking to the sales teams," he added. "It's out there...the tone feels like it's changed."
The commentary came as the company reported fiscal first-quarter adjusted earnings per share of 86 cents on revenue of $688 million, beating expectations of 77 cents a share on revenue of $680 million, according to analysts polled by FactSet.
Despite the earnings beat, Okta said its maintaining guidance for fiscal 2026 revenue of between $2.85 billion and $2.86 billion, and adjusted EPS between $3.23 and $3.28.
Out of 47 analysts covering the stock, 57% rate it Buy or Buy-equivalent, according to FactSet.
Write to Elsa Ohlen at elsa.ohlen@barrons.com
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May 28, 2025 08:38 ET (12:38 GMT)
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