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Goldman Sachs thinks the worst could be over for Okta . Analyst Gabriela Borges upgraded the stock to buy from sell and increased cut her price target to $91 from $77. Her new target implies shares could gain 26.1% in the next 12 months from Friday’s close. The identity management software provider’s stock rose more than 4.3% in premarket trading Monday. “We note the potential for volatility in the stock around earnings given our view that Street numbers may still see one more quarter of downward revisions,” Borges said in the note. “Even on lower revenue, we are 12%/16% above the Street for FY25/FY26 free cash flow as we see the potential for meaningful margin expansion over the next 3 years.” Okta shares have lagged the broader market this year, rising just 4.5%, while the S & P 500 is up 16.3%. Over the past 12 months, the stock has tumbled 31%. OKTA 1Y mountain OKTA in past 12 months But Borges pointed to several growth catalysts for Okta going forward. First, the analyst projected an acceleration in subscription revenue for fiscal 2025 driven by factors such as stabilization in sales productivity, Okta continuing to take market share from more legacy vendors and building out channel partnerships. The company’s subscription revenue is likely to accelerate from 14% in the second half of its current fiscal 2024 to 15%-20% in fiscal 2025. Borges also addressed the impact of competition on Okta from Microsoft, which has become more competitive in security and workforce identity and access management services in recent years. “While the pendulum will likely continue to swing between best in breed and platform in any given year, we believe that there is space for Okta to co-exist with Microsoft,” the analyst said. Against the tech giant, Borges said Okta is superior in areas such as external access management services, out-of-box functionality and support for non-standard applications. Many companies continue to adopt Okta for sophisticated use cases in workforce identity, she added. The firm said that its bull/bear scenarios suggested upside to the stock despite incorporating potential headwinds, such as moderated market share gain and a discount to its target multiple, from Microsoft into its buy thesis. — CNBC’s Michael Bloom contributed reporting.