On Friday, Baird, a financial services firm, updated its outlook on Varonis Systems (NASDAQ:VRNS), a data security and analytics company. The firm increased the price target to $52.00, up from the previous $50.00, while maintaining a Neutral rating on the stock.
The adjustment comes ahead of Varonis Systems' second-quarter earnings report, which is scheduled for release on July 29 after the market closes.
Baird's commentary highlighted that Varonis Systems is entering an interesting phase as it approaches the second half of the year. The firm believes that the company's guidance has been conservative, providing clearer visibility into the likelihood of successfully converting its sales pipeline.
Varonis Systems has reportedly been performing well, which has increased its appeal to investors, particularly as data security continues to be prioritized within corporate security budgets.
The firm noted that Varonis Systems' stock has shown strong performance recently, outpacing the iShares Expanded Tech-Software Sector ETF (IGV) by seven points in the last month. This positive momentum in investor sentiment has been a factor in Baird's reassessment of the company's stock.
However, Baird is awaiting further evidence of Varonis Systems' ability to maintain its valuation premium through significant conversion momentum. This confirmation is necessary for the firm to consider a more bullish stance on the stock.
In other recent news, Varonis Systems has been making waves with a robust first quarter, showcasing a significant 17% increase in annual recurring revenue (ARR) to $560.3 million. This growth is largely credited to the company's successful transition to a software-as-a-service (SaaS) model and the positive market response to its Managed Detection and Response (MDDR) service.
JPMorgan has upgraded Varonis stock from Neutral to Overweight, citing the growing demand for Data Security, which Varonis specializes in. TD Cowen, maintaining its Buy rating, reaffirmed Varonis's strong position to capitalize on the growing demand in the data security sector.
Baird increased its price target on the stock to $50, acknowledging the company's significant progress in its transition to a SaaS model. RBC Capital raised its price target to $58 following Varonis' impressive performance in the recent quarter, which demonstrated strong growth in its SaaS offerings. These are recent developments in the company's journey, reflecting a positive outlook on its performance and potential in the expanding data security market.
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