OKTA Trades 25% Below 52-Week High: Right Time to Buy the Stock?

Okta OKTA shares closed at $95.63 on Wednesday, roughly 25% below the 52-week high of $127.57 it hit on May 16, 2025. Okta shares have appreciated 21.3% year to date, outperforming the Zacks Computer and Technology sector’s return of 10.1% and the Zacks Security industry’s increase of 19.7%.Okta shares have outperformed peers, including CyberArk CYBR, Cisco Systems CSCO and Microsoft MSFT year to date. CyberArk, Cisco, and Microsoft shares have appreciated 12.9%, 15.9% and 20%, respectively.An innovative portfolio and rich partner base are helping Okta shares outperform. The company benefits from strong demand for its new products, including Identity Governance, Privileged Access, Device Access, Fine Grained Authorization, Identity Security Posture Management, and Identity Threat Protection with Okta AI. Okta’s offerings include Okta AI, a suite of AI-powered capabilities embedded across several products, which empowers organizations to harness AI to build better experiences and protect against cyberattacks.OKTA Stock’s Performance Image Source: Zacks Investment Research Okta’s strong liquidity is a key catalyst. The company ended the first quarter of fiscal 2026 with $2.73 billion in cash, cash equivalents, short-term, and long-term investments. Net cash provided by operations was $241 million in the first quarter of fiscal 2026, while free cash flow was $238 million. For fiscal 2026, Okta raised free cash flow margin guidance to roughly 27%.However, the company is facing a challenging macroeconomic condition and stiff competition in the Identity and Access management domain, which is expected to hurt prospects. Okta shares are overvalued, as suggested by the Value Score of D. In terms of forward Price/Cash Flow, OKTA is trading at 22.51X compared with the broader sector’s 22.03X and Cisco’s 20.6X, suggesting a premium valuation. However, in comparison to Microsoft and CyberArk, Okta is cheap. Microsoft is trading at 28.88X while CyberArk is trading at 73.58X.Price/Cash Flow Image Source: Zacks Investment Research So, what should investors do with Okta stock at the current level? Let’s dig deep into its fundamentals to gain some insight.OKTA to Benefit From Innovation, Rich Partner BaseOkta is expanding its security portfolio with the launch of a new protocol, Cross App Access, which helps in securing AI agents. End users ultimately benefit as the latest protocol removes repetitive authorization consent screens and manages agent access for better security and compliance. The latest protocol reflects Okta’s commitment to protecting its customers deploying AI. The company’s focus on protecting non-human identities (NHIs) and developers building secure agents is noteworthy. 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. The company has more than 7,000 integrations with cloud, mobile, and web applications and IT infrastructure providers as of April 30, 2025.OKTA’s innovative portfolio and rich partner base are helping the company win clients. It exited first-quarter fiscal 2026 with roughly 20,000 customers, reflecting strong growth prospects for subscription revenues. Customers with more than $100 thousand in Annual Contract Value increased by 70 sequentially to 4,870. The combined governance portfolio of Okta Identity Governance, Lifecycle Management, and Workflows has surged 400% over the past three years to nearly $40 billion at the end of the fiscal first quarter.OKTA’s FY26 Guidance Reflects Slowing Federal BusinessFor fiscal 2026, OKTA still expects revenues between $2.85 billion and $2.86 billion, indicating 9-10% growth from the figure reported in fiscal 2025. Uncertainty in the federal business, along with challenging macroeconomic conditions, is a headwind for the company. However, Okta expects fiscal 2026 non-GAAP earnings between $3.23 and $3.28 per share, up from previous guidance between $3.15 and $3.20 per share. The Zacks Consensus Estimate for Okta’s earnings has increased 9 cents over the past 60 days to $3.28 per share. The earnings figure suggests 16.73% growth over the figure reported in fiscal 2025. Okta, Inc. Price and Consensus Okta, Inc. price-consensus-chart | Okta, Inc. Quote Okta expects second-quarter fiscal 2026 revenues between $710 million and $712 million, indicating 10% year-over-year growth. The current portion of the company’s remaining performance obligations is expected in the 10-11% range. Okta anticipates non-GAAP earnings between 83 cents and 84 cents per share. For second-quarter fiscal 2026, the Zacks Consensus Estimate for OKTA’s earnings has increased by a nickel to 84 cents per share over the past 60 days. The earnings figure suggests 16.67% year-over-year growth.ConclusionDespite a challenging macroeconomic condition, anticipated sluggishness in federal business and a stretched valuation, Okta rides on an innovative portfolio and an expanding clientele.Okta currently has a Zacks Rank #2 (Buy) and a Growth Score of A, a favorable combination that offers a strong investment opportunity, per the Zacks Proprietary methodology. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.5% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want 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 CyberArk Software Ltd. (CYBR): 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