Berkshire Hathaway’s greatest internet stock holding was called a “top pick” for 2025 by experts at Citi.
VeriSign is Berkshire Hathaway’s biggest internet stock, and the corporation increased its risk in the final days of 2024.
Warren Buffett’s conglomerate possesses a $2.7 billion stake in VeriSign and is the company’s biggest shareholder, having nearly 14% of the business.
VeriSign offers domain registration and listing services and operates essential internet framework. Founded in 1995, it is the sole computer registry for.com and.net domain names and operates two of the 13 worldwide internet root web servers.
According to Citi analysts, VeriSign is positioned for a strong 2025. Citi assigned a $238 cost target, which stands for a prospective benefit of 16% from present degrees. In its bull-case scenario, Citi sees VeriSign rising to $312, representing a possible upside of simply over 50%.
“We check out Verisign as being among the safer plays in Internet with a narrower variety of end results given its practically utility-like nature as a domain name pc registry, capacity to hand down routine cost boosts that causes a resiliant top-line, and finest in class EBITDA margins, providing what we believe to be an attractive risk/reward for capitalists,” Citi states.
VeriSign is among the most profitable firms in the S&P 500.
According to financial data since the 3rd quarter, the business is placed fifth in the S&P 500 for the highest possible profit margin, at about 56%, linked with Nvidia. For operating margin, VeriSign is placed third, and for gross margin, it’s ranked 13th.
Citi stated it is urged by recent month-over-month development in.com domain name registrations, which might point to year-over-year growth in 2025.
“If trends continue to stabilize this way, and with pricing questions currently in the rear-view, VRSN’s price cut to its historical peak will come to be more of a bullish vehicle driver,” Citi stated.
VeriSign had a tough year, with the stock up just 2% contrasted to a 23% gain for the S&P 500. Meanwhile, the stock is down around 20% from its record high reached in December 2021.
That’s left VeriSign trading at a price-to-earnings ratio of concerning 24x, which lines up with its 15-year historical standard. VeriSign’s price-to-earnings premium relative to the S&P 500 is 27% listed below its 15-year standard and 52% listed below its optimal.
The existing valuation configuration is what makes VeriSign a top stock pick for Citi.
“If Verisign were back on track for mid- to high-single-digit top-line development (~ 5% pricing + ~ 2% volume), with high incremental margins, and continued share redeemed bring about double-digit EPS growth, shares at this degree would verify inexpensive,” Citi said.
