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Why Varonis Stock Jumped 36% in December

By Evan Niu, CFA - Jan 4, 2021 at 4:37PM

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Last month's massive cyberattack is expected to boost demand for cybersecurity offerings.

What happened

Shares of Varonis ( VRNS 1.85% ) jumped 35.6% in December, according to data provided by S&P Global Market Intelligence. Cybersecurity stocks broadly rallied last month following news of a massive hack that impacted many corporations and U.S. government agencies.

So what

The widescale breach was reportedly orchestrated by the Russian government and the malicious actors were able to compromise SolarWinds' Orion platform. SolarWinds provides network management software that is used by many companies and governments. As the investigation continues, recent reports suggest that the intrusion is far worse than initially believed.

Green stock chart going up

Image source: Getty Images.

Many analysts believe that the episode will spur greater demand for cybersecurity technology, including Varonis' offerings. In the wake of the revelations, Truist Securities upgraded its rating on Varonis to buy, with analyst Joel Fishbein boosting his price target from $145 to $160. The company specializes in data security for both on-premises and cloud-based applications and has a strong position in governance and compliance, according to Fishbein.

Now what

The analyst believes that Varonis is positioned well and has the potential to beat fourth-quarter earnings estimates. The company's guidance calls for revenue of $82 million to $85 million and adjusted earnings per share of $0.10 to $0.13. Varonis shares approached $180 but have since pulled back and are currently trading right around Truist's price target, suggesting limited upside based on Fishbein's modeling.

Varonis has not yet scheduled its fourth-quarter earnings release but typically reports in early February.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Varonis Systems, Inc. Stock Quote
Varonis Systems, Inc.
$51.13 (1.85%) $0.93

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