Analysts Have Been Trimming Their JFrog Ltd. (NASDAQ:FROG) Price Target After Its Latest Report

One of the biggest stories of last week was how JFrog Ltd. (NASDAQ:FROG) shares plunged 25% in the week since its latest quarterly results, closing yesterday at US$26.14. The statutory results were not great - while revenues of US$103m were in line with expectations,JFrog lost US$0.13 a share in the process. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on JFrog after the latest results.

See our latest analysis for JFrog

Taking into account the latest results, the consensus forecast from JFrog's 17 analysts is for revenues of US$422.9m in 2024. This reflects a meaningful 8.6% improvement in revenue compared to the last 12 months. Per-share losses are supposed to see a sharp uptick, reaching US$0.52. Before this latest report, the consensus had been expecting revenues of US$428.3m and US$0.41 per share in losses. So it's pretty clear the analysts have mixed opinions on JFrog even after this update; although they reconfirmed their revenue numbers, it came at the cost of a massive increase in per-share losses.

With the increase in forecast losses for next year, it's perhaps no surprise to see that the average price target dipped 26% to US$34.69, with the analysts signalling that growing losses would be a definite concern. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values JFrog at US$45.00 per share, while the most bearish prices it at US$25.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that JFrog's revenue growth is expected to slow, with the forecast 18% annualised growth rate until the end of 2024 being well below the historical 25% p.a. growth over the last three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 12% annually. So it's pretty clear that, while JFrog's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at JFrog. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of JFrog's future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for JFrog going out to 2026, and you can see them free on our platform here..

Before you take the next step you should know about the 5 warning signs for JFrog (1 is potentially serious!) that we have uncovered.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.