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On Wednesday, Varonis Systems Inc. (NASDAQ:VRNS) had its stock rating and price target reaffirmed by Cantor Fitzgerald, following the release of its fourth quarter financial results for the year 2024. Analysts at Cantor Fitzgerald maintained an Overweight rating and a $60.00 price target on the company’s shares, well above the current trading price of $42.30. The stock is currently trading near its 52-week low of $41.13, though InvestingPro analysis suggests the shares are overvalued at current levels.
Varonis Systems reported mixed results for the fourth quarter of 2024, with annual recurring revenue (ARR) and free cash flow surpassing the FactSet consensus expectations. The company maintains impressive gross profit margins of 84.06% and has achieved revenue growth of 12.07% over the last twelve months. However, the company’s revenue and operating margins did not meet the anticipated figures. According to Cantor Fitzgerald, the less than expected performance is a direct result of challenges associated with Varonis’s shift to a SaaS ( Software (ETR:SOWGn) as a Service) business model. For deeper insights into Varonis’s financial health and growth potential, InvestingPro subscribers can access comprehensive analysis and additional ProTips.
Despite the mixed results, Cantor Fitzgerald has expressed a positive outlook on the company’s future. The firm highlighted that Varonis has provided a full-year forecast for fiscal year 2025 which appears conservative. The company anticipates a 12% growth in top-line revenue, a 15.5% increase in ARR, and operating margins around 0.9% at the mid-point. While currently unprofitable, InvestingPro data shows analysts expect the company to achieve profitability this year, with an EPS forecast of $0.32 for 2024.
The reaffirmation of the Overweight rating and the $60.00 price target is based on the firm’s confidence in Varonis’s performance and its ongoing transition to a SaaS model. Cantor Fitzgerald’s stance remains unchanged despite the revenue and operating margin shortfall in the most recent quarter.
Investors and market watchers will be keeping an eye on Varonis Systems as it continues to navigate its SaaS transition and strives to achieve the forecasts laid out for the upcoming fiscal year. The company’s progress in this transformation is expected to be a key factor in its financial performance moving forward.
In other recent news, Varonis Systems has been the subject of several analyst adjustments. Morgan Stanley (NYSE:MS) revised its price target for Varonis to $54, maintaining an Overweight rating, following the company’s announcement of a year-over-year increase of 18% in Annual Recurring Revenue (ARR). The company’s ARR growth is attributed largely to a higher-than-expected mix of Software as a Service (SaaS) sales. Varonis also reported a robust Free Cash Flow (FCF) of $109 million for the full year.
Meanwhile, Cantor Fitzgerald initiated coverage on Varonis with a price target of $60 and an Overweight rating, citing the increasing importance of data security investments. The firm anticipates that Varonis’s GenAI technology will significantly impact the company’s ARR in fiscal year 2025. Cantor Fitzgerald expects Varonis to experience multi-year revenue growth in the high teens to low twenties percentage range.
On the other hand, Piper Sandler reduced its price target for Varonis from $55 to $50, while maintaining a Neutral rating. The firm’s analysts believe that the current valuation of Varonis’ shares accurately mirrors the company’s underlying fundamentals, which display a decelerating growth trajectory. Piper Sandler’s analysis projects a five-year revenue compound annual growth rate (CAGR) of 20.2% through the calendar year 2029.
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