Piper Sandler has reaffirmed an Overweight rating on Varonis Systems (NASDAQ: VRNS) and set a $47.00 price target, which represents in excess of 100% upside compared with the stock's current trading level of $20.92. According to InvestingPro data cited by the research firm, Varonis is trading close to its 52-week low after a 20.59% decline over the past week.
The firm described the latest quarter as one of improved execution, pointing to a record number of SaaS conversions and an improvement in renewal rates as tangible signs of momentum. Those operational gains sit alongside a reported gross profit margin of 78.83%.
Despite these positives, Piper Sandler noted that investor sentiment was weighed down by Varonis' 2026 Annual Recurring Revenue (ARR) guidance, which came in below expectations. The research team attributed the conservative tone of the outlook largely to cautious assumptions around conversion ARR and the dynamics of new customer acquisition. Piper Sandler framed those conservative assumptions as creating a "de-risked setup" heading into the coming year.
On the company's broader transformation, Piper Sandler projects that Varonis will complete its transition to a fully SaaS business by the end of 2026. The firm expects growth to exceed 20% on a basis that excludes conversions, a pace it noted is uncommon among public security companies.
InvestingPro data show Varonis was not profitable over the trailing twelve months, but analyst estimates collected by the service point to a return to profitability this fiscal year, with an EPS forecast of $0.09 for FY2026.
Varonis reported a notable fourth-quarter 2025 earnings beat, with EPS of $0.08 versus a consensus forecast of $0.03. Revenue for the quarter came in at $173.4 million, slightly above the expected $168.51 million. Those results included an annual recurring revenue increase of 16.1%, ahead of the 14.5% analysts had been expecting, driven by SaaS momentum and a record number of on-premises-to-SaaS conversions.
At the same time, some analysts remain cautious about the transition. Needham lowered its price target for Varonis to $30 but maintained a Buy rating. Truist Securities trimmed its price target to $34 from $42 while retaining a Buy rating, citing headwinds tied to the company's on-premises operations.
These mixed signals - operational progress in SaaS adoption and margin strength on one hand, and conservative ARR assumptions and lingering on-premises challenges on the other - underscore the dual nature of Varonis' near-term outlook as it shifts its business model.
Summary
Piper Sandler keeps an Overweight rating and $47.00 price target on Varonis, highlighting strong SaaS conversion activity and robust gross margins while investors react to conservative ARR guidance for 2026.