Okta Stock Sinks Pre-Market On Multiple Price Target Cuts Despite Q1 Beat

Okta Inc. (OKTA) stock tumbled more than 10% in Wednesday’s pre-market trading session even as the company posted a double-beat first-quarter performance.

A slew of brokerages cut their price targets on the stock on Wednesday, according to TheFly, with the theme being that none of the upside from Okta’s Q1 beat flowed into its guidance for the rest of the fiscal year.

Analysts at Jefferies highlighted that while Okta’s Q1 results were healthy, the company’s guidance for current remaining performance obligations in the second quarter was a surprise.

If it materializes, this would be the first sequential second-quarter (Q2) decline in Okta’s public history, Jefferies explained. It trimmed its price target for Okta stock to $130 from $135, while maintaining a ‘Hold’ rating.

Analysts at UBS reduced their price target to $130 from $150 while maintaining a ‘Buy’ rating. The brokerage said Okta’s Q2 guidance was “disappointing.”

Guggenheim cut its target to $138 from $140 while maintaining a ‘Buy’ rating. The brokerage said that while the Q1 results beat Wall Street expectations, Okta’s report “looks challenging upon further inspection.”

The firm did note that this was prudent given the growing uncertainty and macroeconomic risks. It also flagged a decline in Okta’s business momentum.

Okta reported earnings per share (EPS) of $0.86, ahead of a Wall Street estimate of $0.77. Its revenue stood at $688 million during the quarter, higher than the expectations of $680.08 million.

The company maintained its fiscal year revenue guidance of $2.85 billion to $2.86 billion, slightly lower than the $2.862 billion estimate for the year. However, its adjusted EPS guidance ranges from $3.23 to $3.28, above the consensus estimate of $3.20.

Okta’s stock has surged 59.26% year-to-date and 30.53% over the past 12 months.

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