Okta (OKTA): Reassessing Valuation After Strong Q3 Results and Upbeat Growth Guidance

Okta (OKTA) just turned in another profitable quarter, with Q3 revenue up to $742 million and net income nearly tripling year over year, and management followed that up with fresh guidance pointing to continued growth.

See our latest analysis for Okta.

The earnings beat and upbeat guidance have helped steady sentiment after a choppy few months, with the share price at around $85.90 and a modest positive year to date share price return. Longer term total shareholder returns still reflect the hangover from earlier selloffs, which suggests that momentum is stabilising rather than surging.

If Okta’s move toward profitable growth has caught your eye, this could be a good moment to explore other high potential names through high growth tech and AI stocks and see what else fits your watchlist.

Yet with shares still well below their five year highs but trading at a premium to many software peers, is the market underestimating Okta’s improving profitability or already pricing in the next leg of growth?

Most Popular Narrative Narrative: 28% Undervalued

With Okta closing at $85.90 against a narrative fair value near $118.80, the valuation case hinges heavily on how identity demand evolves.

The rising frequency and sophistication of cyberattacks, combined with tightening regulatory mandates (especially in the public sector and large enterprises), are establishing identity as a mission-critical, recurring investment category. This aligns with Okta's increased penetration in federal and enterprise verticals, which enhances revenue durability and long-term earnings visibility.

Read the complete narrative.

Curious how recurring identity spend, rising margins and ambitious earnings targets all intersect in one valuation story? The narrative’s core assumptions might surprise you.

Result: Fair Value of $118.80 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, intensifying competition from broader security platforms and any stumble integrating new AI driven products could quickly challenge the current undervalued thesis.

Find out about the key risks to this Okta narrative.

Another Lens On Valuation

On earnings, the picture flips. Okta trades on a rich 78.1 times earnings, far above both peers at 28.9 times and a fair ratio of 36.9 times. That premium suggests sentiment is already optimistic, raising the question of how much upside the current price truly leaves.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Okta Narrative

If you see the numbers differently or want to stress test your own thesis, you can spin up a personalised Okta story in minutes: Do it your way.

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Okta.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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