On Tuesday, Varonis Systems Inc. (NASDAQ:VRNS) shares plunged more than 6% despite posting solid fiscal third-quarter results. The company announced its most recent quarterly results Monday after markets closed, beating the consensus analyst estimate for revenue and earnings.
Varonis posted fiscal Q3 non-GAAP earnings per share of $0.05, smashing the consensus Street estimate of $0.02. On the other hand, its GAAP EPS of -$0.22 missed the average for analyst expectations of -$0.18, while revenue for the quarter surged 30.8% from the third quarter in 2020 to $100.4 million, $2.95 above expectations.
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From an investment perspective, Varonis shares trade at a steep forward P/E ratio of 352.13, making the stock too expensive for value investors.
However, the company offers exciting growth prospects with analysts forecasting earnings per share growth of more than 327% this year and average annual growth of about 48% over the next five years.
Therefore, although Varonis shares seem steeply valued, the stock could be a compelling option for long-term growth investors.
Technically, Varonis shares seem to have recently completed a downward breakout from an ascending channel formation in the intraday chart. As a result, the stock has fallen to find support off the 100-day moving average, creating a perfect opportunity for a rebound.
Therefore, with shares trading off overbought conditions, investors could target potential rebounds at about $65.36, or higher at $67.92. On the other hand, if the decline continues, VRNS could find support at about $59.35, or lower at $56.67.
In summary, although Varonis shares trade at steep valuation multiples, the company offers exciting growth prospects, thus making it perfect for growth investors.
Therefore, with shares seemingly finding support from the 100-day moving average, it could be a perfect time to target a rebound.
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