Varonis Systems Faces Class Action Lawsuit Over Failed Customer Transition, $3.8 Billion Market Cap Loss

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.

As previously reported, Piper Sandler upgraded Varonis to Overweight from Neutral with a price target of $47, up from $45. The firm notes shares meaningfully disappointed coming out of Q3. With numbers effectively reset and an exclusive focus on the SaaS segment of the business - which has remained relatively healthy - Piper thinks shares set up as a compelling long from current levels. The firm believes organizations will continue to piecemeal together data security solutions to address concerns, and the company's stronghold across legacy data stores as well as the more recent modernization of its capabilities should enable Varonis to see continued momentum in both new customer growth as well as migration of the installed base to SaaS - rendering numbers conservative for the coming year.