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Berkshire Hathaway increased its stake in VeriSign, its largest internet stock, in the final days of 2024.
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VeriSign, a domain registry, is poised to grow in 2025 with a price target of $238 from Citi.
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VeriSign is one of the most profitable companies in the S&P 500 Index.
Berkshire Hathaway Analysts at Citi called the largest holding of internet stocks a “top pick” for 2025.
VeriSign is Berkshire Hathaway’s largest internet stock, the conglomerate Its share increased in the last days of 2024.
Warren Buffett’s group owns a $2.7 billion stake in… VeriSign He is the company’s largest shareholder, owning approximately 14% of the company.
VeriSign provides domain registration and listing services and manages critical Internet infrastructure. Founded in 1995, it is the sole registry for .com and .net domains and operates two of the global Internet’s 13 root servers.
According to Citi analysts, VeriSign is poised for a strong 2025. Citi has set a price target of $238, which represents a potential upside of 16% from current levels. In a bullish case scenario, Citi expects VeriSign to rise to $312, representing a potential upside of just over 50%.
“We view Verisign as one of the safest plays in the Internet with a narrower range of outcomes due to its semi-utility nature as a domain registry, its ability to pass on regular price increases that lead to a resilient top line, and better EBITDA margins, providing… “We believe it represents an attractive risk/reward for investors.”
VeriSign is one of the most profitable companies in Standard & Poor’s 500.
According to financial data as of the third quarter, the company ranks fifth in Standard & Poor’s 500 For the highest profit margin of about 56%, tied with Nvidia. For operating margin, VeriSign ranked third, and for gross margin, it ranked 13th.
Citi said it is encouraged by the recent monthly growth in .com domain registrations, which could indicate year-on-year growth in 2025.
“If trends continue to stabilize in this way, and with pricing questions now in the rearview, discounting VRSN to its historical peak will become more of a bullish driver,” Citi said.
VeriSign has had a tough year, with the stock up just 2% compared to a 23% gain for the S&P 500. Meanwhile, the stock is down about 20% from the record high it reached in December 2021.
This leaves VeriSign trading at a price-to-earnings ratio of about 24x, which is consistent with its 15-year historical average. VeriSign’s price-to-earnings premium compared to the S&P 500 is 27% below its 15-year average and 52% below its peak.
It’s this current valuation setup that makes VeriSign Citi’s top stock pick.
“If Verisign gets back on track to deliver mid-to-high total EPS growth (~5% pricing + ~2% volume), with high incremental margins, and continued share repurchases resulting in double-digit EPS growth, Stocks Citi said that this level would be cheap.
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