There's been a notable change in appetite for JFrog Ltd. (NASDAQ:FROG) shares in the week since its first-quarter report, with the stock down 17% to US$33.01. The statutory results were mixed overall, with revenues of US$100m in line with analyst forecasts, but losses of US$0.08 per share, some 4.3% larger than the analysts were predicting. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

After the latest results, the 14 analysts covering JFrog are now predicting revenues of US$428.0m in 2024. If met, this would reflect a solid 16% improvement in revenue compared to the last 12 months. Losses are forecast to narrow 8.9% to US$0.41 per share. Before this latest report, the consensus had been expecting revenues of US$426.9m and US$0.43 per share in losses. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for losses per share, even though the revenue numbers were unchanged.

The consensus price target fell 5.3% to US$46.77despite the forecast for smaller losses next year. It looks like the ongoing lack of profitability is starting to weigh on valuations. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values JFrog at US$55.00 per share, while the most bearish prices it at US$40.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await JFrog shareholders.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that JFrog's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 21% growth on an annualised basis. This is compared to a historical growth rate of 27% over the past three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 13% per year. 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 take away is that the analysts reconfirmed their loss per share estimates for next year. 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.

With that in mind, we wouldn't be too quick to come to a conclusion on JFrog. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple JFrog analysts - going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - JFrog has 4 warning signs we think you should be aware of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.