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Goldman Sachs described Okta shares as cheap compared to other security software companies, despite having numerous paths for further growth.
Goldman Sachs has labeled Okta (NASDAQ: OKTA) shares a buy in a report released on Tuesday. Investment analysts at The Goldman Sachs Group according to reports set a “buy” rating and a $312.00 price target on the company’s stock with other experts stating that the brokerage’s objective suggests a potential upside of 27.06% from the company’s current price.
The report also revealed that Goldman Sachs described Okta shares as cheap compared to other security software companies, despite having numerous paths for further growth. Okta stock opened at $245.55 on July 13 and has a debt-to-equity ratio of 2.57, a quick ratio of 3.76, and a current ratio of 3.76. The stock has a$32.56 billion market capitalization, a 1-year high of $294.00 and a 1-year low of $185.05, a P/E ratio of -100.22, and a beta of 0.98. Okta currently has a 50 day simple moving average of $233.76.
On May 25, Okta released its quarterly earnings, posting ($0.10) earnings per share for the quarter, against the Zacks’ consensus estimate of ($0.20) by $0.10. The cloud-based company however reported a 30.90% negative return on equity coming off the back of a negative net margin of 35.18%. Okta recorded revenue of $251.01 million in the quarter, compared to the consensus estimate of $238.56 million.
Brian Essex, an analyst with Goldman Sachs set a buy rating for the stock and described Okta as “well-positioned as an industry leader” to his clients in a note. “Okta has established itself as a cloud leader in identity and access management with the potential to meaningfully penetrate the adjacent markets of customer identity and access management (CIAM), Identity Management (IGA), and Privileged Access Management (PAM) as its core cloud platform evolves,” he stated in the note.
The Goldman Sachs analyst added that he is optimistic about the company’s recent acquisition of Auth0, an identity company that will bring a long-term value to the company even if it may have been a reason behind Okta’s decline in stock performance this year.
“We believe Auth0 will provide Okta with better developer awareness, broader international market penetration, more integrations, and more visibility into customer identity access control usage patterns,” the note stated.
Okta shares are up over 1000% since its debut back in 2017. The shares have however seen more than a 3% decline since the beginning of the year. Goldman Sachs set a target share price of $312 per share, 27% above the current price with other research analysts expecting Okta to post a -2.88 EPS for the current fiscal year.
Okta’s growth recently led to several large investors changing their positions on OKTA. T Rowe Price Associates Inc increased its stake in the company by 175.1% during the first quarter.