This little-known software stock is a high quality growth pick that could jump 45% in the second half of 2023, Bank of America says

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Investors should buy JFrog ahead of a recovery in the second half of 2023, according to Bank of America. Analyst Brad Sills upgraded shares of JFrog to buy from neutral, saying the high quality growth stock could bounce later this year — even if it is out of favor with investors for the moment. “We believe JFrog is an underappreciated enterprise DevSecOps [development, security and operations] vendors that is positioned to deliver revenue growth above the infrastructure peer group average while expanding profitability margins (operating income, adjusted EBITDA, free cash flow) over the medium term,” Sills wrote in a Wednesday note. JFrog shares underperformed the S & P 500 in 2022 as rising interest rates weighed on growth companies. The enterprise tech stock dropped 28.2% last year, while the broader market index posted a 19% decline. Still, the analyst expects that end-market demand for JFrog will “remain relatively healthy” compared to its peers, even if recession concerns continue to pressure growth prospects in the near-term. This is because companies are increasingly viewing JFrog’s suite of products — including Artifactory, Advanced Security and Xray platforms — as “mission critical” for good-user outcomes, according to the note. “As organizations of all sizes continue to digitally transform, the need for enterprise DevSecOps platforms that mitigate risk, like JFrog, will likely increase, resulting in strong demand for its products and enabling the business to deliver healthy revenue growth and margin expansion trends in the future,” Sills wrote. The analyst raised his price objective to $32 from $28. The new target is about 45% above where shares closed Tuesday. Shares of JFrog gained more than 2% on Wednesday. —CNBC’s Michael Bloom contributed to this report.