Earnings Preview: Can JFrog Stock Leap Higher?

JFrog Ltd (NASDAQ:FROG) is preparing to report third-quarter earnings after the close tomorrow, Nov. 5. Zacks Consensus Estimates call for earnings of 23 cents per share, up 4.5% year over year.

FROG was last seen down 4.6% at $84.42 ahead of the event. The shares have pulled back from their Aug. 28 record high of $105.76, though support around the $83 level has repeatedly kept losses in check. Despite the retreat, the equity is still up 35.1% year to date.

JFrog stock has a historically bullish post-earnings track record. Looking back at the last 12 quarterly reports, the stock finished the following trading session higher eight times, averaging a 6.5% gain and a 15.6% move, regardless of direction. This time around, the options pits are pricing in an 18.6% post-earnings swing, regardless of direction.

Options traders are firmly bearish before the report. Today's order-flow data shows negative net option delta volume of 7,299 shares, with bearish pressure accounting for 87% of the total. Meanwhile, FROG's Schaeffer's put/call open interest ratio (SOIR) of 0.71 ranks in the 84th percentile of its annual range, suggesting a preference for puts amongst short-term traders. 

Analysts are leaning bullish, however, with 17 of the 24 brokerages in coverage carrying a "strong buy" rating, four saying "buy," and three recommending a "hold." This leaves room for potential downgrades should earnings disappoint. Short interest also accounts for 6.5% of the stock's available float, representing more than three days' worth of buying power at FROG's average daily trading volume.