On Wednesday, Needham raised its price target for JFrog stock, traded on (NASDAQ:FROG), from $36.00 to $39.00 while maintaining a Buy rating. Currently trading at $33.92, the stock has analyst targets ranging from $30 to $45, with a strong consensus recommendation of 1.55 on InvestingPro. The adjustment follows JFrog's announcement of an increase in Self-Managed pricing for the fourth consecutive year. Self-Managed products accounted for 61% of the company's revenue in the third quarter of the 2024 calendar year.
The firm believes that JFrog's pricing strategy could provide a slight boost to the growth of its Self-Managed offerings. The company has demonstrated strong execution with impressive gross profit margins of 78% and revenue growth of 24.45% over the last twelve months. It could also encourage customers to upgrade from Pro X to Enterprise X, as the price difference between these tiers has decreased. Additionally, the unchanged pricing of Cloud migrations for the past two years may become more attractive to customers.
Needham analysts have warned investors about potential near-term volatility as they await management's initial guidance for the 2025 calendar year. The current market expectations are for a 17% year-over-year revenue growth, aligning with the company's guidance for 17% revenue growth in the fourth quarter of 2024.
Despite these potential short-term fluctuations, Needham is optimistic about JFrog's long-term prospects. The firm cites the expansion of JFrog's platform to include Security and MLOps as factors that contribute to the company's longer-term growth and the increased price target.
According to InvestingPro analysis, JFrog appears to be slightly undervalued, with seven analysts recently revising their earnings expectations upward. Discover more insights and detailed financial analysis in JFrog's comprehensive Pro Research Report, available exclusively on InvestingPro.
In other recent news, JFrog Ltd. has seen notable developments in its financial performance and strategic direction. The company reported a strong third quarter in 2024, with a 23% increase in total revenues amounting to $109.1 million. Particularly notable was a significant jump in the company's cloud revenue, which grew by 38% year-over-year, now comprising 39% of the total revenues.
JFrog also experienced a positive response from investors following Barclays (LON:BARC) analyst Ryan MacWilliams' note on the company's recent price increases on its self-hosted Pro X and Enterprise X tiers. The price adjustments could conservatively add at least $10 million to JFrog's self-hosted revenues in the fiscal year 2025, according to the initial assessment by Barclays, which maintains an overweight rating on the stock.
Furthermore, JFrog's strategic acquisition of Qwak is expected to enhance their offerings, despite a cautious outlook for large-scale migration deals in the coming year.
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