Why Varonis Systems Inc. Shares Skyrocketed Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Varonis Systems Inc. jumped 20% Tuesday after no less than five analyst firms simultaneously assumed coverage on the stock.

So what: Three of those firms assigned a "buy" equivalent to Varonis shares, including per share price targets of $45 from Jefferies, $48 from Needham, and $50 from RBC Capital. All represent fair premiums not only from Varonis' $22 per share IPO last month, but also over today's closing price at $43.78 per share.


Morgan Stanley and Barclays also chimed in today, with both rating the stock the equivalent of a "hold." Barclays opted to set a price target at $42 per share.

Now what: The timing of the calls isn't coincidence, but rather the result of today marking the end of a mandatory 25-day "quiet period" imposed by the SEC following Varonis' IPO. The expiration means its underwriters are now free to release their respective research reports on the company. It's also worth noting even after today's pop, shares of Varonis are still trading roughly 23% below their post-IPO high set three weeks ago.

However, while I agree Varonis could enjoy potentially mouthwatering top line growth thanks to its market leading solution to help companies map human-generated data -- think spreadsheets, word processing documents, emails, text messages and the like -- I'm in no particular hurry to dive into shares of this yet-to-be-profitable company just yet. Instead, I think investors would be wise to let the dust settle and put Varonis on their watchlists to keep tabs on its progress over the next few quarters.

Are you ready for this $14.4 trillion revolution?
Every investor wants to get in on revolutionary ideas before they hit it big -- like buying PC maker Dell in the late 1980s, before the consumer computing boom, or purchasing stock in e-commerce pioneer Amazon.com in the late 1990s, when it was nothing more than an upstart online bookstore. The problem is, most investors don't understand the key to investing in hypergrowth markets. The real trick is to find a small-cap "pure play" and then watch as it grows in explosive fashion within its industry. Our expert team of equity analysts has identified one stock that's poised to produce rocket-ship returns with the next $14.4 trillion industry. Click here to get the full story in this eye-opening report.

The article Why Varonis Systems Inc. Shares Skyrocketed Today originally appeared on Fool.com.

Steve Symington has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


Increase your money and finance knowledge from home

What are Penny Stocks

The lucrative and dangerous world of penny stocks.

View Course »

Small Cap Investing

Learn now to invest in small companies the right way.

View Course »

Add a Comment

*0 / 3000 Character Maximum