Varonis Plunge Saved by Quiet Period Expiration

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Varonis Systems Inc. (NASDAQ: VRNS) is one of the hot IPOs that came to market since the start of 2014. It is also one that has fallen sharply from its post-IPO peak. Now the company’s post-IPO analyst and brokerage firm quiet period has ended, and the drop from above $56 to $45, and then down to $35, seems to have been stopped.

What Varonis Systems does is offer software products and services to enterprise customers to map, analyze and their unstructured data. The company claims that its business model is characterized by strong revenue growth, growing repeat business and high gross margins. Many companies have tried this, and no clear method or clear solution has yet emerged as a go-to destination. It is a very competitive field, but Varonis is believed to be among the best.

Before you see the ratings and the target, keep in mind that Varonis priced its IPO at $22 per share. We had a prior range of $18 to $20, and then it was raised to $19 to $21 per share.

The following ratings were started as follows:

  • Morgan Stanley: Equal Weight
  • Barclays: Equal Weight and a $42 target price
  • Jefferies: Buy and $45 price target
  • RBC Capital Markets: Outperform and a $50 target price
  • Needham & Company: Buy and a $48 target price

The company’s own description says,

We specialize in human-generated data, a type of unstructured data that includes an enterprise’s spreadsheets, word processing documents, presentations, audio files, video files, emails, text messages and any other data created by employees. This data often contains an enterprise’s financial information, product plans, strategic initiatives, intellectual property and numerous other forms of vital information. Our Metadata Framework is a proprietary technology platform that extracts critical metadata, or data about data, from an enterprise’s IT infrastructure and uses this contextual information to map functional relationships among employees, data objects, content and usage. IT and business personnel deploy our software for a variety of use cases, including data governance, data security, archiving, file synchronization, enhanced mobile data accessibility and information collaboration.

Varonis started operations in 2005 and figures from the past three years are as follows:

  • 2011 revenues were $39.8 million with operating losses of $3.4 million
  • 2012 revenues were $53.4 million with operating losses of $1.6 million
  • 2013 revenues were $74.6 million with operating losses of $5.8 million

Varonis shares were up almost 8% at $39.60 in early afternoon trading on Tuesday, against a post-IPO trading range of $35.12 to $56.80. That post-IPO low was just on Monday.

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