Okta could have room to run as a potential rise in agentic artificial intelligence boosts business for the security software firm, according to Raymond James. The investment bank upgraded the identity and access management stock to outperform from market perform. It has an $85 price target on shares, implying 26.2% upside from Wednesday’s close. Agentic AI refers to tools and services that assist users with a variety of tasks, and technology firms are plowing considerable amounts of funds into the trend. “AI is beginning to move from the experimentation to the production phase in Enterprise use cases, and agents that have previously been using human identity security will now need their own identity security,” analyst Adam Tindle said Thursday in a note to clients. “We see the potential for a significant unit [total addressable market] increase for Okta’s core market due to Agents in the workforce.” He added that Okta could bring in more revenue by expanding into cybersecurity services such as identity governance and administration (IGA) and privileged access management (PAM). “Expansion into IGA and PAM provide Okta with an intriguing consolidation story, and evolving security requirements for AI/agents could expand Okta’s addressable market to provide durable growth and free cash flow generation,” Tindle wrote. In addition, Okta seems to have cleared a major headwind that led its stock to plummet to roughly $60 from $200 over the past few years, according to Raymond James. Net revenue retention “decelerated from > 120% to ~106% due to downsized renewals from COVID cohorts that overprovisioned,” Tindle wrote. “We see this headwind subsiding as average contract duration is just under three years (i.e., renewals have all rolled through), and our analysis of various metrics…suggests a forward waterfall that should result in upside to growth.” Raymond James’ call falls in line with consensus on the Street. Of the 47 analysts covering Okta, 32 have a buy or strong buy on the stock, per LSEG. Shares have fallen 22% in the year to date. They are down nearly 33% over the past year.
