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Citi bullish on VeriSign stock as key .com agreement moves toward renewal

EditorEmilio Ghigini
Published 2024/09/27, 12:18
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On Friday, Citi reaffirmed its Buy rating on VeriSign (NASDAQ:VRSN) stock with a steady price target of $215.00. The endorsement came after the Internet Corporation for Assigned Names and Numbers (ICANN) published the proposed .com Registry Agreement for public commentary. The agreement, which is critical for VeriSign's operations, appears to be on track for renewal with no substantial amendments.

VeriSign, which manages the .com domain, has met all necessary criteria for the renewal, according to ICANN. The posting of the Registry Agreement for public comment is a routine step in the renewal process, suggesting that VeriSign should secure a timely renewal. The current terms, including VeriSign's pricing provisions, have been left unaltered, which is seen as a favorable outcome for the company.

The analyst noted that the proposed changes to the Registry Agreement do not fall under Amendment 35, which would require approval from the Department of Commerce (DOC). This implies that the current discussions between the DOC and VeriSign regarding the .com pricing structure can continue without affecting the present renewal process.

While there remains some uncertainty surrounding the final decision from the DOC and the National Telecommunications and Information Administration (NTIA), the analyst's outlook is optimistic. The expectation is that the renewal will proceed without significant changes, which is considered a positive development for VeriSign.

The company's stock rating and price target have been maintained, reflecting confidence in the ongoing renewal process and the stability of the .com domain's management.

In other recent news, VeriSign Inc (NASDAQ:VRSN). has been in the spotlight with a series of developments. The company reported a 4.1% increase in its second quarter 2024 revenue, along with growth in operating income and earnings per share. However, it also faced a 1.8 million decrease in its domain name base, largely due to shifts in U.S. registrar strategies and a weaker market in China.

In a concerted effort to return value to shareholders, VeriSign executed a significant share repurchase program, buying back 2.2 million shares for $388 million, and authorized an additional $1.11 billion for future repurchases.

Citi reaffirmed its Buy rating on VeriSign, maintaining a steady price target of $215.00, suggesting that despite debates surrounding pricing and domain volume growth, the future could swing back in VeriSign's favor.

The company has also been engaged in discussions with the National Telecommunications and Information Administration (NTIA) regarding the pricing of .com domains and the overall health of the ecosystem.

While no immediate changes to the .com wholesale pricing have been obligated, VeriSign has expressed its commitment to exploring potential solutions. These are recent developments in VeriSign's operations, with more updates expected in the near future.


InvestingPro Insights


As VeriSign (NASDAQ:VRSN) navigates the renewal of its .com Registry Agreement, a look at the company's financial metrics and market performance provides additional context for investors. According to InvestingPro data, VeriSign boasts an impressive gross profit margin of 87.35% over the last twelve months as of Q2 2024, underlining the company's strong profitability in its operations. The company's P/E ratio stands at 21.85, which indicates that the stock is trading at a low price relative to near-term earnings growth, an attractive proposition for value investors.

One of the InvestingPro Tips highlights that management has been actively buying back shares, a signal that could be interpreted as confidence in the company's future prospects. Additionally, VeriSign operates with a moderate level of debt, allowing for financial flexibility. These factors, combined with the stability brought by the expected renewal of the .com Registry Agreement, could contribute to the company's continued profitability, as analysts predict VeriSign will be profitable this year. For investors looking for a deeper dive into VeriSign's metrics, InvestingPro offers a total of 10 tips on their platform at https://www.investing.com/pro/VRSN, which could provide further guidance on investment decisions.

With a market cap of $18.17 billion, VeriSign's financial health and market performance remain key areas of interest. The company's revenue growth over the last twelve months was 4.49%, a steady increase that reflects the enduring demand for domain management services. While VeriSign does not pay a dividend, its stock generally trades with low price volatility, offering a degree of stability for shareholders. These insights from InvestingPro underscore the reasons behind the analyst's confidence in VeriSign's stock rating and price target.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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