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Citi maintains buy rating on VeriSign stock with $215 target

EditorAhmed Abdulazez Abdulkadir
Published 2024/08/20, 17:32
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On Tuesday, Citi reaffirmed its Buy rating on VeriSign (NASDAQ:VRSN) with a steady price target of $215.00. The firm's analysis suggested that despite current debates surrounding the company's pricing and domain volume growth, the future could see these elements swing back in VeriSign's favor.

The discussion around VeriSign has centered on two key uncertainties: the potential return of pricing caps and the company's .com domain volume declines. Citi acknowledges these uncertainties but anticipates a positive resolution for VeriSign. The firm's stance is based on the expectation that VeriSign's earnings per share (EPS) growth could surpass that of the S&P 500 index, implying that the current price-to-earnings (P/E) multiple undervalues the company's intrinsic worth.

Citi's commentary highlighted the dramatic nature of the story unfolding for VeriSign within the market, noting that some of the debates would soon be resolved, while others may linger. The complexity of the growth equation for VeriSign involves both the pricing (P) and the volume (Q) of .com domains, which are presently points of contention among investors.

The firm suggested that while the outcome of these debates remains uncertain, their analysis leads them to believe in a favorable outcome for VeriSign. This optimism is rooted in the expectation that VeriSign's growth in EPS will be robust enough to outpace broader market indices.

Citi concluded its analysis by stating that while a cautious approach may be warranted for some investors, their evaluation continues to be positive on VeriSign. This reiteration of the Buy rating underscores the firm's confidence in the company's value proposition and its potential performance in the market.

In other recent news, VeriSign Inc (NASDAQ:VRSN). reported growth in its second quarter 2024 earnings call, with a 4.1% increase in revenue, growth in operating income, and earnings per share. However, the company also reported a 1.8 million decrease in its domain name base, attributed to shifts in U.S. registrar strategies and a weaker market in China. The company also announced a significant share repurchase program, having bought back 2.2 million shares for $388 million, and authorized an additional $1.11 billion for future repurchases.

Verisign has also been in discussions with the National Telecommunications and Information Administration (NTIA) regarding the pricing of .com domains and the overall health of the ecosystem, including both retail and secondary markets. The discussions follow an exchange of letters between the two entities, and while no immediate changes to the .com wholesale pricing have been obligated, Verisign has expressed its commitment to exploring potential solutions.

The company is also preparing for the renewal of the .com registry and the pursuit of the new Top-Level Domain (TLD) .web. Full-year 2024 revenue is projected to be between $1.553 billion and $1.563 billion, with operating income expected to range from $1.048 billion to $1.058 billion.

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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