Varonis slides on back of Morgan Stanley downgrade

2026-01-26 08:22:35 ET

• Varonis Systems ( VRNS ) shares slid 2.5% in premarket trading on the back of a downgrade from Morgan Stanley, which cited an “increasingly competitive data security market,” including from Microsoft ( MSFT ).
• “Our prior [Overweight] thesis on VRNS had been at least partly due to a significant AI opportunity we saw for the company, particularly on the back of their partnership with Microsoft,” analyst Meta Marshall wrote in a note to clients. “However, with our accompanying hyperscaler security note today highlighting increased competitiveness of the Microsoft Purview solution, and multiple other start-ups in the field, we are less optimistic on VRNS' sustained ability to outperform expectations. This stance is echoed by recent survey results. We could be too cautious if company, with sales people not being burdened with SaaS transition, can focus on selling the broader platform, including Managed Data Detection and Response (MDDR), Identity Protection (launched June 2025), Database Activity Monitoring (DAM, launched July 2025), and E-mail Security (Slash Next Acquisition in September 2025).”
• Marshall lowered her rating on Varonis to Equal-Weight from Overweight and trimmed her price target to $41 from $44.
• Additionally, Marshall said she sees “more limited durable catalysts in the near term and need to see more traction with selling a broader portfolio now that they are not focused on the SaaS transition.”

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