TLDR
- After Anthropic announced Claude Code Security, JFrog (FROG) dropped more than 20%, raising concerns about AI disrupting traditional security tools.
- Raymond James maintained its Outperform rating, stating that the sell-off was “excessive” and a potential buying opportunity.
- JFrog exceeded Q4 estimates – EPS of $0.22 compared to the expected $0.19, revenue of $145.31M compared to $138.09M, a 25.2% year-over-year increase.
- Nineteen analysts give FROG a consensus “Moderate Buy” with an average 12-month price target of $65.94.
- Insiders sold approximately $24.97M worth of stock in the last 90 days, and the stock is currently trading around $37.75.
JFrog Ltd. (FROG) suffered a significant decline last week, dropping more than 20% in a single session after introduced Claude Code Security – an AI-native tool that analyzes vulnerabilities directly at the source-code layer.
Investors didn’t wait to see how it would unfold. The sell-off was rapid and substantial.
The concern is straightforward: if AI can detect security issues during the coding process, do enterprises still require downstream package-level tools like JFrog’s Curation product? This question spooked the market.
There is also a broader concern regarding perception. If companies start considering AI-native security as “adequate,” they may slow down the adoption of JFrog’s incremental security modules. And in the long term, there is fear that Anthropic could expand into artifact scanning – an area that is squarely within JFrog’s core business.
Despite all this, not everyone is rushing to sell.
Raymond James maintained its Outperform rating on FROG, calling the sell-off “excessive.” The firm contends that the market is overreacting by extrapolating far beyond what Code Security actually does currently.
Their argument: JFrog operates at a different layer of the software stack – the artifact and package layer – where it provides policy enforcement and governance that large enterprises still need, regardless of what is happening at the code review stage.
Q4 Results Were Actually Strong
Given the commotion, it’s easy to overlook that JFrog just reported a solid quarter.
The company reported Q4 EPS of $0.22, beating the consensus estimate of $0.19. Revenue came in at $145.31 million, exceeding the $138.09 million analysts expected – and a 25.2% increase compared to the same quarter last year.
For context, JFrog earned $0.19 EPS in Q4 of the previous year, so the year-over-year EPS improvement is genuine.
Looking ahead, the company set FY2026 EPS guidance at $0.88–$0.92 and Q1 2026 guidance at $0.20–$0.22 EPS. Analysts project full-year 2026 revenue at $626 million, with Non-GAAP EPS of $0.90.
What Analysts Are Saying
The overall analyst community still has a positive inclination. Of the 19 brokerages covering the stock, 15 have a buy rating, three have a hold, and one has a sell. The average 12-month price target is $65.94 – well above the current trading price of $37.75.
Canaccord Genuity lowered its target from $75 to $66 but maintained its buy rating. TD Cowen did the opposite, raising its target from $75 to $80. UBS set a $60 target, while Cantor Fitzgerald reiterated an overweight rating with an $80 target. Wall Street Zen upgraded the stock from hold to buy on February 15th.
Raymond James points to JFrog’s security pipeline as a reason for confidence. Security accounted for 16% of Remaining Performance Obligations at the end of FY25, and analysts estimate that this supports at least 50% year-over-year Security ARR growth for the current year.
Regarding insider activity, executives and directors sold approximately $24.97 million worth of stock in the last 90 days. The stock is currently trading at $37.75, within a 52-week range of $27.00 to $70.43.
Institutional investors hold 85.02% of FROG, with several new small positions initiated in Q4.
