Okta Declines 11% in a Month: Should You Buy the Stock on the Dip?

Okta OKTA shares have declined 11% in a month, given a challenging macroeconomic environment due to higher tariffs. However, an innovative portfolio that includes Okta Identity Governance, Privileged Access, Device Access, Fine Grain Authorization, Identity Security Posture Management and Identity Threat Protection with Okta AI is expected to help OKTA shares surge in 2025.

Year to date, Okta shares have returned 29.3%, outperforming close competitors including Microsoft MSFT, International Business Machines IBM and CyberArk CYBR. Shares of International Business Machines and CyberArk returned 3.6% and 4.6%, respectively, while Microsoft fell 8.2% over the same timeframe.

OKTA Stock's Performance

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Okta rides on strong demand for new products, with more than 20% of fourth-quarter fiscal 2025 bookings from new products. OKTA’s innovative portfolio is helping the company win clients, driving top-line growth. It exited fourth-quarter fiscal 2025 with 19,650 customers and $4.215 billion in remaining performance obligations, reflecting strong growth prospects for subscription revenues. Customers with more than $100 thousand in Annual Contract Value increased 7% year over year to 4,800.

OKTA Benefits From Strong Demand for Identity Solutions

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 Platform and Auth0 Platform are compatible with public clouds, on-premises infrastructures and hybrid clouds. 

Customers use Okta Workforce Identity to manage and secure their employees, contractors and partners. Through the Customer Identity solution, Okta customers enable, manage and secure the identities of their customers. Identity Governance, Privileged Access, Device Access, Identity Security Posture Management, and Identity Threat Protection with Okta AI are other key solutions in the Okta platform. The Auth0 platform comprises of the Auth0 Platform, Fine Grain Authorization, Highly Regulated Identity and Self Service.

Okta recently announced the availability of Auth for GenAI in Developer Preview, as part of the Auth0 Platform, a suite of features that enable developers to integrate secure identity into GenAI applications. This ensures AI agents have built-in authentication, fine-grained authorization, async workflows, and secure API access. The new Okta Platform brings a unified, end-to-end identity security fabric to organizations for managing and securing all types of identities, from AI agents to API keys to employees.

Okta’s strong portfolio is helping it win market share in the cybersecurity domain against Microsoft, International Business Machines and CyberArk. It is also winning accolades. Gartner has placed OKTA higher than Microsoft and CyberArk in all use cases on the Gartner Critical Capabilities for Access Management. OKTA is the only vendor recognized as a Gartner Peer Insights Customers’ Choice for Access Management six times in a row.

Okta is benefiting from a rich partner base that includes the likes of Amazon Web Services (AWS), CrowdStrike, Google, LexisNexis Risk Solutions, Microsoft, Netskope, Palo Alto Networks, Plaid, Proofpoint, Salesforce, ServiceNow, VMware, Workday, Yubico and Zscaler. The company has over 7,000 integrations with cloud, mobile, and web applications and IT infrastructure providers as of Jan. 31, 2025.

Okta’s Q1 & FY26 View Strong

For first-quarter fiscal 2026, Okta expects revenues between $678 million and $680 million, indicating 10% year-over-year growth. It anticipates non-GAAP earnings between 76 cents and 77 cents per share.

For first-quarter fiscal 2026, the Zacks Consensus Estimate for OKTA’s earnings has increased 11.6% to 77 cents per share over the past 60 days. The earnings figure suggests 18.46% year-over-year growth.
 

For fiscal 2026, OKTA expects revenues between $2.85 billion and $2.86 billion, indicating 9-10% growth from the figure reported in fiscal 2025. Okta expects fiscal 2026 non-GAAP earnings between $3.15 and $3.20 per share. 

For fiscal 2026, the Zacks Consensus Estimate for Okta’s earnings has increased by 9.6% to $3.19 per share over the past 60 days. The earnings figure suggests 13.52% growth over the figure reported in fiscal 2025.

Okta’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 15.7%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Here’s Why Okta Stock is a Buy

Okta is an attractive bet in the near term, given its strong growth prospects and large addressable market, which justify a premium valuation, as suggested by the Value Score of F. 

In terms of forward Price/Sales, OKTA is trading at 6.05X compared with the broader sector’s 5.56X, suggesting a premium valuation.

Price/Sales F12M

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The stock is currently trading above the 200-day moving average, indicating a bullish trend.

OKTA Stock Trades Above 200-Day SMA

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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.

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This article originally published on Zacks Investment Research (zacks.com).

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