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Can Okta Continue Its Impressive Run in 2019?

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Apr. 17 2019, Published 8:32 a.m. ET

OKTA’s returns

Enterprise identity management service provider Okta (OKTA) has generated a return of 132% in the last 12 months. Since the start of 2019, the stock is up 48%. It’s generated a return of 300% since its IPO in April 2017.

Okta stock is currently trading 3% below its 52-week high of $97.24 and 142% above its 52-week low of $40.24. With a relative strength index score of 65, MSI stock is trading close to overbought territory.

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Can Okta’s astonishing upward trajectory continue for the rest of 2019? The company’s stock price rise has been driven by its sales growth. Its revenue has risen from $260 million in 2018 to $399 million in 2019. Its sales are expected to rise to $534 million in 2020, $699 million in 2021, and $909 million in 2022.

The company’s EBITDA has improved from -$58.7 million in 2018 to -$34.3 million in 2019. It’s expected to rise to $48.8 million by the end of 2022.

Is Okta overvalued?

Okta isn’t yet profitable, so it doesn’t have a forward PE ratio. The company’s EPS are expected to grow at a compound annual growth rate of 20% over the next five years. Are its revenue and earnings growth enough to keep investors interested in its stock? What does Wall Street think?

Analysts’ recommendations

Of the nine analysts covering Okta, five have given it “buy” recommendations, four have given it “hold” recommendations, and none have given it “sell” recommendations. The average 12-month target price for Okta is $88.53, which indicates a potential downside of 6% from its current level.

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