Okta Shares Rise 17% Year to Date: Buy, Sell or Hold the Stock?

Okta OKTA shares have appreciated 16.7% year to date (YTD), underperforming the Zacks Computer and Technology sector’s return of 18.2%. Okta’s shares can be attributed to slowing federal business, a challenging macroeconomic condition and stiff competition in the Identity and Access management domain. Okta shares have underperformed Microsoft MSFT but outperformed Palo Alto Networks PANW and Cisco Systems CSCO over the same timeframe. Palo Alto Networks, Cisco and Microsoft shares have appreciated 9%, 14.3% and 18.9%, respectively.OKTA Stock’s YTD Performance Image Source: Zacks Investment Research Okta stock is currently trading below the 50-day and 200-day moving averages, indicating a bearish trend.OKTA Stock Trades Below the 50-Day and 200-Day SMAs Image Source: Zacks Investment Research Okta shares are also overvalued, as suggested by the Value Score of D. In terms of forward 12-month price/sales (P/S), Okta is trading at 5.29X higher than Cisco’s 4.47X.OKTA Stock's Valuation Image Source: Zacks Investment Research So, what should investors do with Okta stock at the current level? Let’s dig deep to find out.OKTA Rides on Strong Portfolio and Rich Partner BaseOkta’s strong portfolio that includes new offerings, including Okta Identity Governance (OIG), Okta Privileged Access (OPA), Okta Device Access, Identity Security Posture Management (ISPM), Identity Threat Protection (ITP) with Okta AI and Fine-Grained Authorization. These new solutions are helping OKTA gain market share and drive top-line growth. Okta is benefiting from a rich partner base that includes the likes of Amazon Web Services, CrowdStrike, Google, LexisNexis Risk Solutions, Microsoft, Netskope, Palo Alto Networks, Plaid, Proofpoint, Salesforce, ServiceNow, VMware, Workday, Yubico and Zscaler.  Okta and Palo Alto Networks have expanded their partnership that combines Okta Workforce Identity and Palo Alto Networks’ Prisma Access Browser. Integration between Identity Threat Protection with Okta AI and Palo Alto Networks AI-driven Cortex SecOps platform offers organizations a unified view of identity-related risks across their entire attack surface.In the second quarter of 2025, total revenues increased 12.7% year over year to $728 million and surpassed the consensus mark by 2.37%. Customers with more than $100K in Annual Contract Value (ACV) increased more than 7% year over year to 4,945. In the reported quarter, five of OKTA’s top 10 deals were with the U.S. public sector. Strong demand for Okta’s solutions, further supported by Cross App Access, a new open standard, is expected to boost subscription revenues in the long haul.Okta is providing an end-to-end secure identity fabric for securing non-human identities (NHIs). OKTA offers the same level of visibility, access control, governance and remediation as human identities to NHIs. Okta offers the ability to detect and discover NHIs, provision and register them properly, authorize and protect them with appropriate policies, and govern and monitor their behavior continuously.OKTA’s FY26 Guidance Reflects Modest GrowthFor fiscal 2026, OKTA expects revenues between $2.875 billion and $2.885 billion, indicating 10-11% growth from the figure reported in fiscal 2025. The estimated growth rate is lower than 15% growth Okta reported in fiscal 2025.Okta expects fiscal 2026 non-GAAP earnings between $3.33 and $3.38 per share. The Zacks Consensus Estimate for Okta’s earnings has increased 7 cents to $3.36 per share over the past 30 days. The earnings figure suggests 19.6% growth over the figure reported in fiscal 2025.Okta expects third-quarter fiscal 2026 revenues between $728 million and $730 million, indicating 9-10% year-over-year growth. The current portion of the company’s remaining performance obligations is expected to be 10%.  Okta, Inc. Price and Consensus Okta, Inc. price-consensus-chart | Okta, Inc. Quote Okta anticipates non-GAAP earnings between 74 cents and 75 cents per share. For the third quarter of fiscal 2026, the Zacks Consensus Estimate for OKTA’s earnings has inched up by a couple of cents to 76 cents per share over the past 30 days. The earnings figure suggests 13.4% year-over-year growth.Here’s Why OKTA is Best to Avoid NowOKTA’s innovative portfolio and rich partner base are helping the company win clients. However, a challenging macroeconomic condition, intensifying competition and a stretched valuation make the stock a risky bet in the near term.Okta currently has a Zacks Rank #4 (Sell), which implies that investors should avoid the stock right now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.See our %%CTA_TEXT%% report – free today!7 Best Stocks for the Next 30 DaysWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Microsoft Corporation (MSFT): Free Stock Analysis Report Cisco Systems, Inc. (CSCO): Free Stock Analysis Report Palo Alto Networks, Inc. (PANW): Free Stock Analysis Report Okta, Inc. (OKTA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks