Okta Inc. (OKTA) shares rose in early Wednesday trading after the identity management company posted better-than-expected fiscal third-quarter results. But here's the catch: analysts are cutting their price targets anyway.

The reason? Growth is slowing, and Q4 guidance suggests that trend isn't reversing anytime soon.

What Analysts Are Saying

Three major firms weighed in with a consistent theme—solid execution, but tempered expectations:

• Scotiabank analyst Patrick Colville maintained a Sector Perform rating while lowering his price target from $105 to $85
• Needham analyst Mike Cikos reiterated a Buy rating but trimmed his target from $125 to $110
• BTIG analyst Gray Powell reaffirmed a Buy rating while slashing his target from $142 to $116

The Growth Deceleration Story

Scotiabank's Colville pointed out that while Okta's cRPO (current remaining performance obligations) grew 13% in Q3, the fourth-quarter guidance "was less exciting and slightly below consensus." More concerning, the guidance implies year-over-year cRPO growth deceleration for the fourth consecutive quarter.

There's a silver lining though. Okta's operating margin beat guidance, and management raised their full-year outlook by more than the beat amount. "This is important as Okta's bottom line discipline has helped support the stock given the slowing topline," Colville noted.

The Numbers Behind The Moves

BTIG's Powell highlighted that Okta reported cRPO of $2,328 million, topping consensus estimates of $2,264 million. Fourth-quarter revenue guidance came in at $749 million, beating Street expectations of $738 million.

But the Q4 cRPO guidance of $2,447.5 million tells a more nuanced story. That represents 8.9% year-over-year growth versus 12.9% in Q3, and it came in below consensus of $2,453 million. Powell noted that "OKTA faced a tough comparison against last year that many did not seem to factor into estimates."

The AI Angle

Needham's Cikos pointed out something interesting: management didn't provide fiscal 2027 guidance, citing "material seasonality to Okta's business." But they did share that over 100 existing customers representing more than $200 million in ARR "have already engaged with Okta – as organizations look for a single control plane to observe and manage AI Agents."

Translation: there's potential upside from AI adoption, even as core growth metrics moderate.

Shares of Okta were up 1.21% to $82.86 at the time of publication Wednesday.