Okta Inc (NASDAQ:OKTA) was gifted an upgrade by Bank of America analysts on Thursday after outdoing estimates in its fourth-quarter results.
Lifting the identity and access management firm from an ‘underperform’ to a ‘buy’ rating, BoA said the strong performance could pave the way for future outperformance.
“While prior concerns around new customer growth, saturation among the existing customer base and ongoing execution issues kept us at underperform, we believe these headwinds have lessened,” analysts said in a note.
“[We] view 2025 guidance as overly conservative,” the bank added, “which could drive upwards estimate revisions throughout the year and warrant positive rerating of the stock”.
Okta reported fourth-quarter per-share earnings of US$0.63 after hours on Wednesday, which was up on the US$0.30 recorded last year and better than consensus estimates of US$0.55.
This was on the back of a 19% jump in revenue to US$605 million, with the firm ending the year with US$2.20 billion in cash.
Current remaining performance obligations growth of 16% far outdid expectations, BoA noted, with a shift to larger enterprise customers also set to bode well.
“Heading into the quarter, we flagged that the company would need to rely on new customers to support growth,” the bank added, these “results alleviated our concerns”.
Okta guided for revenue to sit between US$603 million and US$605 million for the ongoing first quarter, against consensus expectations of US$584 million.
Per share earnings of US$0.54 to US$0.55 were also anticipated by the company, compared to analysts’ expectations of US$0.41.
Shared climbed 19.5% to US$103.89 on Thursday.