Varonis Subscription Model Could Bring Almost 40% Upside Potential

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Varonis Systems, Inc. (NASDAQ: VRNS) offers a broad range of robust features and unique functionalities that differentiates it from traditional data security offerings. This firm continues to be in the sweet spot of purchasing cycles, and that is starting to resonate with customers, according to one key analyst firm.

Boutique brokerage firm Wedbush reiterated its outperform rating with an $85 price target, implying an upside of 39% from the most recent closing price of $61.23.

Based on Wedbush’s positive recent second-quarter checks, the firm believes Varonis is continuing to show significant progress in its shift to a subscription model and is in the early innings of capitalizing on this next chapter of growth over the next 12 to 18 months.

In its report, here’s what Wedbush had to say:

While this model transition will not happen overnight with the company aiming to hit the key 25% subscription threshold for 2019, we are seeing an increased appetite in the field around this new go-to-market and pricing strategy with enterprises as well as the partner ecosystem. Although these transitions always have clear bumps in the road for software vendors, we believe Varonis is managing this transition well thus far as the product and market opportunity lends itself to this new pricing model with more consistent execution now on the horizon.

Overall, Varonis’ software platform represents a new layer of inside security and governance on how enterprises understand their critical business data, while managing and addressing key data security and governance issues.

Wedbush was quick to note that the key value proposition for Varonis is securing and protecting who has access to the voluminous amounts of unstructured data being created and kept within organizations of all shapes and sizes. As the amount of data rises, Wedbush believes protecting this unstructured data will become paramount to organizations’ security portfolio, which is a clear tailwind for Varonis this year and next.

Shares of Varonis were last seen down less than 1% at $60.89, with a 52-week range of $48.67 to $82.00. The consensus analyst price target is $74.38.

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