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No Leap of Faith, Solid Growth Can Drive JFrog Shares Even Higher

 JFrog Ltd. stock price

DevOps platform provider JFrog Ltd. (NASDAQ: FROG) stock has seen a resurgence as it nears the upper weekly rectangle trendline resistance. The stock has been in the trading range for over a year. The "Liquid Software" company provides essential and mission-critical tools to enterprise technology companies to help manage software artifacts and binaries across DevOps and DevSecOps software supply chain processes.

Like liquid, its continuous delivery environment ensures that software is updated and released constantly and securely. Despite the challenging macroeconomic climate, the company continues to see growing demand for solutions. JFrog has most Fortune 100 companies as clients. Some of its high-profile clients include Alphabet Inc. (NASDAQ: GOOGL), Inc. (NASDAQ: AMZN), Cisco Systems Inc. (NASDAQ: CSCO), Oracle Co. (NASDAQ: ORCL)  and Meta Platforms Inc. (NASDAQ: META).

Software Artifacts and Binaries

The company provides software and tools for storing, delivering and managing software binaries and artifacts through its hybrid, multi-cloud platform. Artifactory is its universal artifacts repository. Software artifacts include source code, test results and documentation.

Binaries are configuration files, executable files and libraries. Software artifacts and binaries are traceable and improve collaboration between developers, improving the quality of the software. These two components are crucial to the software development processes as they store crucial information that enables developers to test and run the software. JFrog Xray scans artifacts for vulnerabilities.

JFrog DevOps Tools

JFrog Pipelines is a continuous integration and continuous delivery platform enabling the secure delivery of artifacts and binaries. JFrog empowers client companies to manage their software delivery pipelines, a crucial feature that companies like Google, Amazon Web Services, and Oracle utilize. Cisco and Facebook use the JFrog platform to improve their software’s security. The liquid environment helps clients become more agile and responsive to changes while helping to contain costs through the building, testing and deployment automation.

Beat and Raise

May 3, 2023, JFrog released its fiscal first-quarter 2023 results for the quarter ending March 2023. The Company reported an earnings-per-share (EPS) profit of $0.06, excluding non-recurring items, versus consensus analyst estimates of $0.03, a $0.03 beat. Revenues rose 25.3% year-over-year (YoY) to $79.82 million, beating analyst estimates of $78.4 million.   

CEO Insights

JFrog CEO Shomi Ben Haim commented, “The market continues to validate the JFrog Software Supply Chain Platform as a mission-critical piece of companies’ infrastructure, reflecting the reality that software packages and binaries are the primary assets companies manage and secure across DevOps and DevSecOps.” The growing demand can generate significant cash flow margins and solid growth over the next five years.

Raised Guidance

JFrog raised its fiscal Q2 2023 guidance EPS of $0.05 to $0.06 versus $0.03 consensus analyst estimates on revenues of $82.5 million to $83.5 million versus $82.77 million consensus analyst estimates. JFrog raised its full-year 2023 EPS guidance of $0.19 to $0.21 versus $0.18 consensus estimates. It sees full-year 2023 revenues of $341.5 million to $345.5 million versus $342 million consensus analyst estimates.

JFrog analyst ratings and price targets are at MarketBeat.

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Weekly Rectangle Trading Range

The weekly candlestick chart on FROG illustrates the weekly rectangle trading range that commenced over a year ago at $28.03, forming the upper trendline resistance in April 2023. Shares sold off down to the $16.94 level forming the lower flat-bottom trendline in June 2022. A weekly market structure low (MSL) trigger breakout through $20.20 helped FROG rally toward the flat-top upper trendline near $28.03 by January 2023.

FROG shares collapsed towards the flat-bottom lower trendline again in May 2023 before staging a seven-week rally back towards the upper rectangle trendline resistance near $28.03 in June 2023. The lower high candle formed the weekly market structure high (MSH) sell trigger on a breakdown under $26.05.

Pullback support levels are $23.97, $22.22, $20.20 weekly MSL trigger and $18.92.

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