Raymond James Upgrades Okta to Outperform: Is This Beaten-Down Cybersecurity Stock a Screaming Buy at $60?

Okta (NASDAQ:OKTA) stock just earned a Buy-equivalent upgrade from Raymond James, which upgraded the identity security company to Outperform from Market Perform and set an $85 price target. That’s meaningful given that shares have fallen from $200 in fiscal 2023 to around $71 today, even as the underlying business has turned the corner on profitability.

The setup matters. Okta’s net revenue retention decelerated from over 120% to 106% because COVID-era cohorts that overprovisioned licenses began downsizing renewals. Raymond James believes that headwind is fading, noting that Okta’s average contract duration is just under three years, meaning those bloated contracts are cycling off.

The Analyst’s Case

Raymond James argues that its analysis of various metrics points to a “forward waterfall that should result in upside to growth” for Okta. The firm sees AI as a meaningful tailwind, with potential for a meaningful total addressable market increase for Okta’s core market due to agents in the workforce. That’s a real catalyst: Okta recently launched Auth0 for AI Agents and positioned itself as, in CEO Todd McKinnon’s words, “the only independent and neutral identity platform” to secure every identity, from humans to AI agents.

Not everyone is equally bullish. KeyBanc analyst Eric Heath trimmed his price target to $95 from $100 while keeping an Overweight rating, citing mixed survey results from 36 IT and security channel partners amid elevated component pricing, geopolitical uncertainty, and AI disruption. Notably, about 20% of partners are seeing a reduction in software spend in favor of AI-native solutions, a risk worth watching.

Company Snapshot

Okta is a cloud-based identity and access management platform serving enterprises and government agencies. Full-year FY2026 revenue came in at $2.919 billion, up 12% year over year, and the company hit a milestone: its first year of GAAP operating profitability, generating $149 million in operating income versus a $74 million loss in FY2025. Free cash flow for the year reached $863 million, rising 18%.

Okta delivered four consecutive quarters of non-GAAP EPS beats in FY2026, with remaining performance obligations of $4.83 billion, rose 15% year over year, signaling durable enterprise demand. OKTA stock is down 22% year to date.

Why the Move Matters Now

Okta’s fundamentals have improved while its stock has been cut sharply. For investors navigating cybersecurity and cloud stocks navigating AI disruption, the Raymond James upgrade frames Okta as a recovery play. The company’s FY2027 revenue guidance of $3.17 billion to $3.19 billion implies 9% growth, which is a deceleration Raymond James attributes to the renewal headwind rather than any structural deterioration in the business.

What It Means for Your Portfolio

If you believe the COVID-era contract overhang is the main drag and AI agent identity security represents a real incremental market, the Raymond James upgrade makes a compelling case for revisiting OKTA stock at current levels. The consensus analyst target sits at $100.52, well above today’s price, and the forward P/E ratio stands at 17x, which is modest for a profitable, high-margin software business.

The KeyBanc target cut and channel partner survey data remind investors that near-term execution risk remains. Size a position accordingly and watch for whether AI-driven bookings accelerate meaningfully in the quarters ahead.