Varonis Systems' (VRNS) would make an "interesting M&A candidate," RBC Capital Markets analysts said in a note to clients on Wednesday, after Bloomberg reported that the company may be exploring a sale.

With Varonis Systems positioned as a software as a service-only solution today, the company's financial profile could make sense with improving margins coming out of the SaaS transition, RBC said.

Competition is intensifying with data security and governance features likely to be consolidated to a broader platform vendor, and there could be a window of opportunity for Varonis to sell before competition increases further, the bank said.

RBC maintained its outperform rating on Varonis with a $36 price target.

Price: 36.03, Change: +1.00, Percent Change: +2.85