Okta Stock Is Tumbling Thursday: What's Going On?

Okta Inc OKTA shares are trading lower Thursday despite reporting better-than-expected financial results. JPMorgan and BMO Capital downgraded the stock Thursday morning. Multiple analysts also lowered price targets following the print, which appears to be adding to the selling pressure.

What Happened: Okta's adjusted first-quarter earnings per share of 22 cents topped consensus estimates of 13 cents. Its revenue also exceeded expectations, with the company reporting $518 million against analyst forecasts of $510.51 million.

"We started the new fiscal year with strong non-GAAP operating profit and record cash flow, which is a testament to the actions we've taken to increase efficiency and profitability," said Todd McKinnon, co-founder and CEO of Okta. 

Looking ahead, Okta anticipates second-quarter revenue to come in between $533 million and $535 million versus estimates of $527.87 million. It also expects earnings to be in the range of 21 to 22 cents per share versus the consensus of 17 cents per share.

Okta raised its total revenue guidance for fiscal year 2024. The company now expects revenue to be between $2.175 billion and $2.185 billion (versus the consensus of $2.17 billion), up from its previous forecast of $2.155 billion to $2.17 billion.

The company has also increased its earnings outlook for full-year 2024, now anticipating earnings in the range of 88 to 93 cents per share (versus the consensus of 78 cents per share), up from its previous guidance of 74 to 79 cents per share.

"While macroeconomic pressures are increasing, we are well positioned to advance our leadership position by delivering valuable product innovation to our customers while delivering non-GAAP profitable growth to our shareholders," McKinnon said.

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Analyst Changes:

• JPMorgan analyst Brian Essex downgraded Okta from Overweight to Neutral and lowered the price target from $95 to $85.
• Bernstein analyst Peter Weed maintained Okta with a Market Perform and lowered the price target from $92 to $84.
• BMO Capital analyst Keith Bachman downgraded Okta from Outperform to Market Perform and lowered the price target from $94 to $85.
• Oppenheimer analyst Ittai Kidron reiterated Okta with an Outperform and maintained a $110 price target.
• RBC Capital analyst Matthew Hedberg maintained Okta with an Outperform and raised the price target from $110 to $112.
• UBS analyst Roger Boyd maintained Okta with a Buy and lowered the price target from $100 to $95.

OKTA Price Action: Okta shares were down 20.1% at $72.64 at the time of writing, per Benzinga Pro.

Photo: Tumisu from Pixabay.