Okta's Cross App Access Expands Security Portfolio: Buy the Stock?

Globe and Mail

6 days ago

Okta OKTA is expanding its security portfolio with the launch of a new protocol, Cross App Access, which helps in securing AI agents. The company is working with ISVs in launching Cross App Access that will enable ISVs' enterprise customers to better connect their AI tools to other apps and data. End users ultimately benefit as the latest protocol removes repetitive authorization consent screens and manages agent access for better security and compliance.
The latest protocol reflects Okta's commitment to protecting its customers deploying AI. The company's focus on protecting non-human identities (NHIs) and developers building secure agents is noteworthy. NHIs include service accounts, shared accounts, machines and tokens, and often operate outside traditional identity governance frameworks and can leave organizations vulnerable to security risks. Identity Security Posture Management and Okta Privileged Access help in solving the vulnerabilities related to NHIs.
Moreover, for developers, Okta is gaining from the rapid adoption of the Auth0 platform. Auth for generative AI addresses the problem of AI agents creating unsecured NHIs by enabling developers to integrate secure identity into their GenAI applications.
OKTA Benefits From Innovative Portfolio
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. The company benefits from strong demand for its new products, including Identity Governance, Privileged Access, Device Access, Fine Grained Authorization, Identity Security Posture Management, and Identity Threat Protection with Okta AI.
OKTA's innovative portfolio is helping the company win clients, driving top-line growth. It exited first-quarter fiscal 2026 with roughly 20,000 customers and $4.084 billion in RPOs, reflecting strong growth prospects for subscription revenues. Customers with more than $100 thousand in Annual Contract Value increased by 70 sequentially to 4,870. The combined governance portfolio of Okta Identity Governance, Lifecycle Management, and Workflows has surged 400% over the past three years to nearly $40 billion at the end of the fiscal first quarter.
Okta is benefiting from a rich partner base that includes the likes of Amazon Web Services, CrowdStrike, Google, LexisNexis Risk Solutions, Microsoft MSFT, Netskope, Palo Alto Networks, Plaid, Proofpoint, Salesforce, ServiceNow, VMware, Workday, Yubico and Zscaler. The company has more than 7,000 integrations with cloud, mobile, and web applications and IT infrastructure providers as of April 30, 2025.
An innovative portfolio and rich partner base have helped Okta shares jump 25.2% year to date, outperforming the Zacks Computer and Technology sector, as well as peers CyberArk CYBR, Cisco Systems CSCO and Microsoft. While the sector has returned 0.9%, CyberArk, Cisco and Microsoft shares have appreciated 19.2%, 13.8% and 15.3%, respectively, over the same timeframe.
OKTA Stock's Performance
The stock is currently trading above the 200-day moving average, indicating a bullish trend.
OKTA Stock Trades Above 200-Day SMA
OKTA's FY26 Guidance Reflects Slowing Federal Business
For fiscal 2026, OKTA still expects revenues between $2.85 billion and $2.86 billion, indicating 9-10% growth from the figure reported in fiscal 2025. Uncertainty in the federal business, along with challenging macroeconomic conditions, are headwinds for the company.
However, Okta expects fiscal 2026 non-GAAP earnings between $3.23 and $3.28 per share, up from previous guidance between $3.15 and $3.20 per share. The Zacks Consensus Estimate for Okta's earnings has increased 9 cents over the past 30 days to $3.28 per share over the past 30 days. The earnings figure suggests 16.73% growth over the figure reported in fiscal 2025.
Okta expects second-quarter fiscal 2026 revenues between $710 million and $712 million, indicating 10% year-over-year growth. The current portion of the company's remaining performance obligations (RPOs) is expected in the 10-11% range.
Okta anticipates non-GAAP earnings between 83 cents and 84 cents per share. For second-quarter fiscal 2026, the Zacks Consensus Estimate for OKTA's earnings has increased by a nickel to 84 cents per share over the past 30 days. The earnings figure suggests 16.67% year-over-year growth.
Okta Shares Trading at a Premium
Okta shares are overvalued, as suggested by the Value Score of D.
In terms of forward Price/Cash Flow, OKTA is trading at 23.23X compared with the broader sector's 20.13X and Cisco's 19.7X, suggesting a premium valuation.
Price/Cash Flow
Conclusion
Despite a challenging macroeconomic condition and a stretched valuation, Okta rides on an innovative portfolio and an expanding clientele.
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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