What Happened?
Shares of data protection and security software company Varonis (NASDAQ: VRNS) jumped 4.5% in the afternoon session after it received an upgrade from Wells Fargo, which also significantly raised its price target on the stock. The upgrade came from Wells Fargo analyst Andrew Nowinski, who lifted the data security firm's rating from "Equal-Weight" to "Overweight." Alongside the improved rating, the analyst also boosted the price target on the shares significantly, from $51.00 to $70.00. This new target represents a substantial 37.25% increase, signaling a strong optimistic outlook on the company's stock potential and future performance.
After the initial pop the shares cooled down to $55.14, up 4.4% from previous close.
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What Is The Market Telling Us
Varonis’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 12 days ago when the stock gained 5.2% on the news that the company posted strong second-quarter earnings that surpassed analyst expectations and raised its full-year guidance. The data security firm reported earnings of $0.03 per share, which surpassed the consensus estimate of $0.01, while revenues of $152.16 million also topped forecasts. Management expressed confidence in its ongoing transition to a Software-as-a-Service (SaaS) model, a subscription-based delivery method for software. Varonis increased its Annual Recurring Revenue (ARR) growth target for 2025 to 17% and noted its SaaS mix was projected to reach 82% by year-end. The positive results prompted multiple analysts to raise their price targets, including Needham, RBC Capital, and Cantor Fitzgerald. The stock's move also occurred amid broader activity in the cybersecurity sector, which potentially increased investor focus on the industry.
Varonis is up 24.3% since the beginning of the year, and at $55.14 per share, it is trading close to its 52-week high of $59.98 from October 2024. Investors who bought $1,000 worth of Varonis’s shares 5 years ago would now be looking at an investment worth $1,468.
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