What happened
Shares of Okta (OKTA -1.79%) were climbing higher this morning after the cloud identity company got some bullish analyst notes following its annual investor conference yesterday.
As a result, the stock was up 5.2% as of 10 a.m. EDT.
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So what
In the conference yesterday, Okta announced new product expansions into identity governance administration and privileged access management, adding to its core categories of workforce identity management and customer access management. With that expansion, the company now estimates its total addressable market to be worth $80 billion, up from its previous estimate of $55 billion. Management also forecast an annual organic growth rate of 30% through 2024, leading to a $2 billion run rate by that year.
This morning, Okta got some plaudits from Wall Street for the update as Mizuho analyst Gregg Moskowitz said the company was meaningfully expanding its addressable market and was well positioned for long-term growth, saying the company had set forth a "very ambitious strategy." He also estimated the company's annual growth rate would be 35%, including the Auth0 acquisition. Still, he maintained a neutral rating on the stock and a price target of $255, saying he was waiting to see how the Auth0 integration went.
DA Davidson, meanwhile, reiterated a buy rating and a price target of $280, saying the company offers the most comprehensive identity platform on the market.
Now what
With the recent Auth0 acquisition and two new product categories, Okta clearly has a long growth runway in front of it. The cloud stock has been a consistent winner since its 2017 IPO as it's delivered steady top-line growth and margin improvement. While shares are arguably pricey, its baseline of 30% organic growth over the next three years and a huge addressable market to grow into show why it's worth paying up for the stock.
