Varonis Faces Class Action Lawsuit Over Misleading Statements

Written by Emily J. Thompson, Senior Investment Analyst

VRNS-4%

Source: PRnewswire

Updated: 1h ago

0mins

Source: PRnewswire

Lawsuit Background: A class action lawsuit has been filed against Varonis Systems, Inc. following its October 28, 2025 disclosure of weaker-than-expected customer renewals and SaaS conversions, highlighting a significant trust crisis as the company struggles with its transition.
Stock Price Plunge: Following the lawsuit announcement, Varonis shares plummeted over 48% the next day, erasing approximately $3.8 billion in market capitalization, indicating extreme market pessimism regarding the company's future growth potential and possibly leading to further erosion of investor confidence.
Earnings Warning: Varonis acknowledged in the lawsuit that its Q3 2025 financial results significantly missed expectations and revised down its Q4 and full-year ARR guidance, underscoring the increasing challenges and uncertainties faced during its transition, which could impact long-term strategic planning.
Investor Rights Protection: Hagens Berman urges investors who suffered losses to come forward, indicating potential misleading statements by Varonis during its transition, emphasizing the importance of protecting investor rights, which may trigger broader legal and market repercussions.

VRNS

$34.21+Infinity%1D

Analyst Views on VRNS

Wall Street analysts forecast VRNS stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for VRNS is 52.18 USD with a low forecast of 37.00 USD and a high forecast of 80.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.

18 Analyst Rating

14 Buy

4 Hold

0 Sell

Strong Buy

Current: 35.635

Low

37.00

Averages

52.18

High

80.00

Current: 35.635

Low

37.00

Averages

52.18

High

80.00

JPMorgan

Brian Essex

Overweight

maintain

$62 -> $50

2026-01-26

New

Reason

JPMorgan

Brian Essex

Price Target

$62 -> $50

AI Analysis

2026-01-26

New

maintain

Overweight

Reason

JPMorgan analyst Brian Essex lowered the firm's price target on Varonis to $50 from $62 and keeps an Overweight rating on the shares ahead of the Q4 report. The report be an :important catalyst that could provide investors with better confidence in the health" of the company's software-as-a-service business, the analyst tells investors in a research note. The firm says Varonis' "kitchen sinked" fiscal 2025 annual recurring revenue guidance "looks very achievable." it cites recent peer multiple contraction for the target cut.

Morgan Stanley

Overweight -> Equal Weight

downgrade

$44 -> $41

2026-01-26

New

Reason

Morgan Stanley

Price Target

$44 -> $41

2026-01-26

New

downgrade

Overweight -> Equal Weight

Reason

Morgan Stanley downgraded Varonis (VRNS) to Equal Weight from Overweight with a price target of $41, down from $44. The firm sees an "increasingly competitive" data security market for Varonis, particularly from Microsoft (MSFT). As such, Varonis shares lack catalysts for a sustainable positive re-rating in the near term, the analyst tells investors in a research note. Morgan Stanley wants to see more evidence of traction for Varonis' selling its broader platform before again recommending the shares.

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Truist

Buy

downgrade

$50 -> $42

2026-01-20

Reason

Truist

Price Target

$50 -> $42

2026-01-20

downgrade

Buy

Reason

Truist lowered the firm's price target on Varonis to $42 from $50 and keeps a Buy rating on the shares as part of a broader research note previewing Q4 for Cybersecurity names. Companies in the firm's coverage should report a strong calendar Q4 and take a conservative posture for guidance, so that model setups could drive a continued beat-and-raise cadence for 2026, the analyst tells investors in a research note. Conversations with IT budget holders and software sellers indicate demand and the macro environment remains unchanged, with continued momentum in Security & AI initiatives, the firm added. Truist notes however that software equities have entered 2026 under pronounced pressure as investors rotate toward AI hardware, also pointing to concerns about AI-driven competitive disruption, slow monetization of AI features, higher-for-longer interest rates, and acute geopolitical shocks converge across the sector driving the IGV - iShares Expanded Tech-Software Sector ETF - down about 7% just in the first couple of weeks of trading.

Cantor Fitzgerald

Overweight

downgrade

$60 -> $50

2026-01-07

Reason

Cantor Fitzgerald

Price Target

$60 -> $50

2026-01-07

downgrade

Overweight

Reason

Cantor Fitzgerald lowered the firm's price target on Varonis to $50 from $60 and keeps an Overweight rating on the shares. The firm's 2026 outlook for Security & Infrastructure Software highlights improving deal sizes, rising AI-driven demand, and broad optimism for near-term cybersecurity spending, the analyst tells investors in a research note. Cantor expects cloud, identity, and AI security to be the fastest-growing segments, while endpoint, legacy SecOps, and network security continue to lag.

About VRNS

Varonis Systems, Inc. is a data security company. The Company’s cloud-native data security platform discovers and classifies critical data, removes exposures, and detects advanced threats with artificial intelligence (AI)-powered automation. Varonis software enables enterprises of all sizes and industries to protect data stored in the cloud and on-premises, including sensitive files, emails and databases; confidential personal data belonging to customers, patients and employees; financial records; source code, strategic and product plans; and other intellectual property. Its SaaS product portfolio includes two product lines: its flagship Varonis Data Security Platform, which protects Microsoft 365, Windows file shares, Active Directory, Edge devices (VPN, DNS, proxy), UNIX/Linux and hybrid NAS storage, and DatAdvantage Cloud, which protects IaaS environments and SaaS applications, such as Salesforce, AWS, Azure, Google Cloud, Google Workspace, Databricks, ServiceNow, and others.

About the author

Emily J. Thompson

Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.