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Varonis Systems Stock on Track for Worst Day in Years

VRNS put volume is hot with the stock short-sale restricted

Jul 31, 2018 at 10:24 AM
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The shares of Varonis Systems Inc (NASDAQ:VRNS) are selling off sharply this morning, after the cybersecurity firm recorded a wider-than-forecast second-quarter adjusted loss of 8 cents per share -- though the $62.2 million in revenue the company brought in matched the consensus estimate. Analysts were quick to lower their outlooks, too, sending VRNS stock down 24.6% to trade at $54.35 -- on track for its worst day since May 2015.

Looking at the charts, Varonis Systems rallied hard from last August's lows near $36 to its mid-June record high of $83.10. Since then, the shares have been pulling back, and surrendered a long-term foothold above their 50-day moving average last Friday. Today's drop has the equity slicing through its 200-day moving average -- a trendline not breached on a daily closing basis since March 2017.

Against this backdrop, no fewer than five brokerage cut their VRNS price targets today. The harshest outlook came from Craig-Hallum, which lowered its price target to $68 from $80. Though this still stands at a premium to current trading levels, the analyst in coverage cited weakness in West Coast sales.

Overall, most analysts are upbeat toward VRNS. Of the 11 brokerages covering the shares, nine maintain a "buy" or better rating. Plus, the average 12-month price target of $76.08 is a 39% premium to current levels. Continued weakness in Varonis Systems stock could encourage more analysts to issue bear notes.

And while the stock isn't heavily shorted, one batch of bearish bettors is certainly cheering today's plunge, considering short interest surged 76.7% in the two most recent reporting periods. Nevertheless, these pessimistic positions account for just 2% of the stock's float.

With VRNS short-sale restricted today, speculators are looking elsewhere to bet bearishly on the stock. Amid relatively low absolute volume, puts are trading at 30 times what's typically seen at this point in the day.

 

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