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Berkshire Hathaway in recent days 2024 increased its stake in VeriSign, its largest Internet stock holding.
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Domain registrar VeriSign is poised for 2025 upside with a $238 price target set by Citi.
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VeriSign is one of the most profitable companies in the S&P 500.
Berkshire Hathaway’s Citi analysts called the largest Internet exchange a “top pick” for 2025.
VeriSign is the largest Internet stock and conglomerate of Berkshire Hathaway increased its share in the last days of 2024.
Warren Buffett’s conglomerate owns a $2.7 billion stake VeriSign and is the company’s largest shareholder, owning almost 14% of the company.
VeriSign provides domain registration and registry services and manages critical Internet infrastructure. Founded in 1995, it is the sole registry for .com and .net domains and manages two of the Internet’s 13 global root servers.
According to analysts at Citi, VeriSign is poised for a solid 2025. Citi has set a price target of $238, representing a potential upside of 16% from current levels. In its overall scenario, Citi sees VeriSign rising to $312, representing a potential upside of just over 50%.
“We consider Verisign to be one of the safer plays on the Internet with a narrower range of results given its almost utility nature as a domain registrar, ability to pass on regular price increases leading to a resilient top-line and best-in-class EBITDA margins, delivering what we believe to be attractive risk/reward for investors,” Citi said.
VeriSign is one of the most profitable companies in the S&P 500.
According to financial data for the third quarter, the company is in fifth place S&P 500 for the highest profit margin, around 56%, tied with Nvidia. VeriSign ranks third for operating margin and 13th for gross margin.
Citi said it was encouraged by recent month-over-month growth in .com domain registrations, which could point to year-over-year growth in 2025.
“If trends continue to stabilize in this manner, and with pricing questions now in hindsight, VRSN’s discount to its all-time high will become more of a growth driver,” Citi said.
VeriSign has had a rough year, with shares up just 2% compared to a 23% gain for the S&P 500. Meanwhile, shares are down about 20% from their all-time high reached in December 2021.
That means VeriSign is trading at a price-to-earnings ratio of about 24x, which is in line with its 15-year historical average. VeriSign’s price-earnings premium to the S&P 500 is 27% below its 15-year average and 52% below its peak.
