© Reuters.
JFrog Ltd. (FROG) shares were raised to Overweight from Equal-Weight at Morgan Stanley on Thursday, with the investment bank lifting its price target for the stock to $42 from $32 per share.
Analysts at Morgan Stanley see JFrog as a solid compounder with an attractive valuation that will benefit from a rebound in software development initiatives.
“Despite a tough spend environment in recent years, JFrog’s growth has proven more resilient given the key role it plays in securing the software supply chain,” the analysts wrote.
“A rebound in software dev projects is likely ahead as enterprises restart transformation initiatives and prioritize building the next wave of AI-powered app,” they added.
They added that as a play on the volume of software releases, JFrog is a beneficiary, and the bank sees such an environment translating to durable 20%+ top-line growth through CY27. In addition, the analysts noted that with operating and free cash flow (FCF) margins set to hit 21% and 26%, respectively, by CY27, this implies 40% FCF growth over that period, resulting in the firm’s new $42 price target.
