Varonis Systems Stock Analysis:
According to 15 analyst’s forecasted predictions for Varonis Systems shares, the company’s average 12-month target price is expected to be USD 32.50. The consensus analyst rating for Varonis Systems is a Buy. Varonis Systems stock analysis by Stock Target Advisor, which is based on 1 positive signal and 7 negative signal, is Bearish. The stock price of Varonis Systems was USD 26.77 at the most recent closing. The stock price of Varonis Systems has changed by +1.59% over the previous week, +0.94% over the previous month, and -58.65% over the previous year. The 12 month Crowd target for the stock is $30 per share, with a consensus Buy Crowd rating.
Analysts adjust Ratings for Varonis after earnings:
Jefferies Financial LLC maintains their Buy rating on the stock and reduces the 12 month target to $30 from $35 per share.
Barclays lowers the target price on Varonis Systems to $22 from $32, and maintains their Equal-Weight rating for the company.
Needham & Company LLC lowers their target price to $26 from $32 while maintaining the Buy rating on Varonis Systems.
Wedbush Downgrades Varonis Systems to a Neutral rating and cuts the target price in half to $20 from $40.
About Varonis Systems (VRNS:NSD)
In North America, Europe, the Middle East, Africa, and globally, Varonis Systems, Inc. offers software tools and services that enable businesses to manage, analyze, notify, and safeguard their enterprise data. With the use of its software, businesses may safeguard sensitive files, emails, patient, employee, and customer data, financial records, strategy and product plans, and other intellectual property that is kept on-site and in the cloud. In addition to DatAdvantage, which records, aggregates, normalizes, and analyses every data access event for users on Windows and UNIX/Linux servers, storage devices, email systems, Intranet servers, cloud applications, and data stores, the company also offers DatAlert, which creates profiles of users, devices, and their behaviours related to systems and data, detects and alerts on deviations that indicate compromise, and offers a Web-based dashboard and investigative interface. Additionally, it offers Data Classification Engine, which categorizes and tags data according to standards established in various metadata dimensions and provides business and information technology (IT) personnel with actionable intelligence about data; and DataPrivilege, a self-service Web portal that enables users to request access to data required for their business functions and owners to grant access without the need for IT intervention. The company also offers DatAnswers, which offers search functionality for enterprise data, and Data Transport Engine, which offers an execution engine that unifies the manipulation of data and metadata by translating business decisions and instructions into technical commands, such as data migration or archiving. Through a network of distributors and resellers, Varonis Systems, Inc. distributes goods and services. The business offers services to corporate, security, and IT workers. The corporate headquarters of Varonis Systems, Inc. are located in New York, New York.
News:
Varonis Systems stock fell 36% on Tuesday after numerous analysts voiced concern about the company’s long-term forecast, which showed a dramatic deceleration.
To reflect near-term headwinds from macroeconomic uncertainty and ongoing foreign currency volatility, the company lowered its earlier full-year 2022 guidance late Monday after reporting third quarter results that missed Wall Street expectations.
Wells Fargo downgraded the stock’s ratings and price target, claiming that “management provided a very dire outlook for ARR in CY23, equating to just 10-12% Y/Y growth, due in part to FX headwinds, a worsening macro backdrop, and a new transition to a SaaS platform. Additionally, they did not offer any guarantees that the installed base will stay unaffected (there was no colour on the NRR), which gives us little faith that the advice they offered was excessively cautious.”
The financial services company believes that the company’s shift to a SaaS model would be beneficial in the long run, but it anticipates that the change will cause significant revenue challenges in CY23 and beyond while the company makes the transition (expected to last 4-6 years). Concerns were also expressed about rising attrition as a result of the personnel decrease, which could further constrain ARR growth. Wedbush also downgraded Varonis, citing that while macroeconomic factors are at play, a number of product-specific and execution concerns also appear to be having an impact on the outlook, which suggests a significant ARR deceleration through 2023.
Fundamental Stock Analysis:
Positive Fundamentals:
A healthy cash flow. The last four quarters saw positive total cash flow for the organization.
Negative Fundamentals:
Inadequate risk-adjusted returns. In comparison to its rivals, this company’s risk-adjusted return performance is below average. The returns are unpredictable, even if it is outperforming in terms of returns. Be careful as you go.
High Volatility. Over the past five years, this company’s total returns have been erratic and higher above the industry average. If you plan to invest in such a stock, be sure your risk tolerance is adequate.
Lower than average dividend returns. In comparison to its competitors, the company’s average income yield during the past five years has been low. If you are not seeking for work, it is not an issue.
Compared to book value, it is overpriced. On a price to book value basis, the stock is selling at a premium to the median of its peer group.
Overpriced based on cash flow. On a price to cash flow ratio, the stock is trading at a premium to that of its competitors. Its pricing is higher than the sector median. Whenever you are thinking about buying, go with prudence.
Free cash flow that is negative. In the last four quarters, the company’s overall free cash flow was negative.
Is Varonis Inc. a Buy, Hold or Sell after Earnings?
The company’s outlook has deteriorated considerably after the company reported it’s quarterly earnings that missed the forecasted earnings estimates, and the forwarding looking estimates caused additional concern.
The VRNS’s stock has been falling since a year ago, after touching it’s most recent high of $73 per share in the fall of last year.  The stock is currently testing it’s $17.50 support level, and if the stock breaks through and stays under this level, then the stock price will be on route to trade between the $10 to $11 area.
Once the stock finds support, and consolidates, that valuation point could be an attractive entry point to accumulate a long position in the company for outsized future gains once the economy and market rebounds.
Varonis’s stock is currently rated with a fundamental score of 1.2 out of 10, where 0 is very bad and 10 is very good.
