Varonis Systems (VRNS) could be an "attractive acquisition target" given its focus on data security and governance and its valuation relative to security peers, RBC Capital Markets said in a report emailed Thursday.
RBC said a sale to a private equity buyer with a strategic asset "could make sense," though the firm has "no knowledge of any potential transaction." The comments followed an unconfirmed Bloomberg report that Thoma Bravo-backed Proofpoint could be in talks to acquire Varonis.
Varonis shares trade at about 6.5 times estimated 2027 enterprise value-to-sales, compared with about 9.9 times for security peers, the firm noted. Historically, software private equity deals have occurred at an average forward enterprise value-to-sales multiple of roughly 6 times, according to the report.
Varonis' focus on "data security and governance" has become more relevant in the generative AI world and the company is in a "good position" to capture a meaningful share of a "large and growing market," the report said.
Still, "competition is intensifying," and data security and governance capabilities could increasingly be consolidated into broader platforms, creating a potential window for Varonis to pursue a sale before competitive pressure increases further, the report said.
RBC kept its outperform rating on Varonis Systems, with a price target of $52.
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