Balancing SaaS Momentum and Legacy Headwinds: Why Varonis Remains a Buy with a Lowered $30 Target

Mike Cikos, an analyst from Needham, assigned the Buy rating on Varonis Systems. The associated price target is $30.00.

Mike Cikos has given his Buy rating due to a combination of factors tied to Varonis’s evolving business mix and long‑term positioning. He highlights that the company’s SaaS segment is performing well, with solid net retention and strong year‑over‑year growth in SaaS annual recurring revenue excluding conversions, indicating healthy customer adoption and expansion within the cloud offering. Despite these strengths, he acknowledges meaningful uncertainty around how much of the existing Non‑SaaS recurring revenue base will successfully shift to SaaS by the end of 2025, given management’s relatively wide conversion range.

Cikos also points out that anticipated churn in the legacy Non‑SaaS business will weigh on free cash flow in 2026, and that management’s cash flow outlook is notably below current Street expectations, which introduces near‑term pressure. He underscores that questions remain around the pace of Non‑SaaS migration, the trajectory of net revenue retention, and the ability to drive new customer business in the interim. Even so, he believes Varonis should exit 2026 in a healthier strategic and financial position, as the business becomes more SaaS‑centric, which supports maintaining a Buy rating. Reflecting both the positive long‑term thesis and the nearer‑term headwinds, he reduces his price target to $30 while reiterating his constructive stance on the stock.

In another report released today, Jefferies also maintained a Buy rating on the stock with a $50.00 price target.