Piper Sandler Upgrades Varonis as SaaS Focus Causes Long-Term Recovery Hopes

Analysts predict a resurgence of upside due to Varonis' SaaS transition despite stock pressure and churn concerns.

Piper Sandler changed its price objective from $45.00 to $47.00 after upgrading from Neutral to Overweight. This puts it above the analyst consensus low target of $40 but below the high target of $62.

The announcement that Varonis's on-premises solutions will approach end-of-life by the end of 2026 and its third-quarter results, which showed unanticipated customer churn, put a lot of pressure on the company's stock. Over the last six months, the stock has dropped by almost 37%, and it is presently trading at $32.04. Despite recent difficulties, Varonis retains exceptional gross profit margins of 80.04%, according to InvestingPro data, indicating solid underlying business fundamentals. The extensive Pro Research Report provides clear, useful information on this and more than 1,400 other US stocks.

According to Piper Sandler, Varonis shares offer a "compelling long-term opportunity from current levels" because expectations have been reset and the company is concentrating solely on its SaaS business area, which has remained "relatively healthy." This opinion is consistent with the InvestingPro study, which shows that the business has a solid current ratio of 1.81 and more cash than debt on its balance sheet.

The research group anticipates that businesses will keep putting together different data security solutions to deal with specific issues, with Varonis preserving its dominance over traditional data stores while updating its capabilities.

Piper Sandler suggests that the present financial predictions for the upcoming year may be modest because it expects both the migration of the installed base to SaaS solutions and the growth of new customers to continue.

In other recent news, Varonis Systems released third-quarter results that fell short of consensus estimates for billings, sales, and annual recurring revenue (ARR). Unexpected churn in on-premises federal and non-government renewals was blamed for this poor performance. As a result, a number of analysts changed their price projections for the business. Citing the unsatisfactory outcomes, Cantor Fitzgerald reduced its price objective to $60 while keeping an Overweight rating. Additionally, Truist Securities observed the decline in renewal rates in the on-premises category and lowered its price target to $50 while retaining a Buy rating. After the firm significantly lowered its ARR guidance for the calendar year 2025, DA Davidson lowered its price objective to $40 while maintaining a Neutral rating. In order to improve data security visibility and threat detection capabilities, Varonis has announced new integrations with Microsoft Purview and AWS Security Hub. The goal of these connectors is to give security teams enhanced platform visibility and automated remediation.