BofA Securities upgraded Okta to Neutral from Underperform and raised its price target to $170 from $75, citing accelerating bookings growth and early traction in AI-driven security products.
The upgrade reflects a 14% year-over-year increase in Okta’s current remaining performance obligations (cRPO) to $2.59 billion in the second quarter of fiscal 2027, exceeding BofA’s forecast of $2.51 billion. The brokerage also projected third-quarter cRPO at $2.6 billion, above the consensus estimate of $2.57 billion.
BofA’s new valuation framework applies a multiple of nine times enterprise value-to-sales for fiscal 2027, up from a previous 4.5 times multiple. The firm noted Okta’s expanding product mix, with newer offerings contributing 30% of bookings in the quarter, up from 25% in the first quarter. Identity Governance remained the primary growth driver, while Privileged Access and Identity Threat Protection also gained traction. Contracts including newer products generated average values 40% higher than other products.
Okta’s AI security initiatives have secured multiple multi-million dollar contracts, helping enterprises govern and secure AI agents. BofA characterized AI adoption as still in its early stages, with limited disclosure metrics and minimal expected contribution to fiscal 2027 results.
Okta’s shares have surged over 110% in the past four months, trading above historical enterprise value-to-sales ranges. The upgrade follows sustained demand for identity and access management solutions amid broader enterprise digital transformation trends.
