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On Monday, Citi analyst Ygal Arounian increased the price target for VeriSign (NASDAQ:VRSN) stock to $260 from the previous $250, while maintaining a Buy rating on the shares. The company, currently valued at $21 billion, is trading near its 52-week high of $224. The adjustment follows VeriSign’s fourth-quarter results, which Arounian described as encouraging, with fiscal year 2025 guidance surpassing expectations. According to InvestingPro data, two analysts have recently revised their earnings estimates upward for the upcoming period.
VeriSign, a global provider of domain name registry services and internet infrastructure, reported a significant year-over-year growth rate in the fourth quarter, with 9.5 million gross new registrations, marking the highest growth since the second quarter of 2021. The company maintains impressive gross profit margins of 87.7% and achieved 4.3% revenue growth in the last twelve months. Arounian noted that these results bolster the view that the volume headwinds the company has been facing are cyclical rather than structural. For deeper insights into VeriSign’s financial health and growth prospects, investors can access the comprehensive Pro Research Report available on InvestingPro.
The company’s revenue and operating income guidance for FY25 were both ahead of Citi’s projections, while domain guidance aligned with expectations. Arounian highlighted an observed positive shift in monthly domain trends, with month-over-month growth detected in January. This led Citi to initiate a 90-day upside Catalyst Watch on VeriSign shares.
In the report, VeriSign identified three potential tailwinds that could aid in the improvement of domain trends by 2025. First, cyclical trends may encourage registrars to concentrate on customer acquisition throughout the year, as evidenced by two registrars advertising during the Super Bowl. Second, marketing programs are anticipated to have a more significant impact in the current year. Lastly, the negative effects of China-based registrar headwinds are expected to diminish, given that China now accounts for approximately 5% of VeriSign’s revenue.
In other recent news, VeriSign has been making significant strides in its business operations. Citi analyst Ygal Arounian recently raised VeriSign’s stock price target to $250, up from the previous $246, following the company’s reported growth in its domain name base. This increase was primarily driven by a rise in .com domain registrations.
Berkshire Hathaway (NYSE:BRKa) has also shown confidence in VeriSign, adding approximately 234,000 shares to its portfolio. This addition increased Berkshire’s total holdings in VeriSign to 13 million shares.
Baird has shown a bullish stance on VeriSign, upgrading the company from Neutral to Outperform and increasing the price target to $250. This decision was influenced by the resolution of regulatory concerns and an optimistic outlook on VeriSign’s domain growth strategy.
VeriSign also recently renewed its Cooperative Agreement with the National Telecommunications and Information Administration (NTIA) of the Department of Commerce (DOC), maintaining the current pricing structure for .com domains. Additionally, VeriSign renewed its .com Registry Agreement with the Internet Corporation for Assigned Names and Numbers (ICANN), introducing provisions to better align with ICANN’s Base Registry Agreement.
These recent developments indicate a positive trajectory for VeriSign, as recognized by analysts from Citi and Baird, and the investment from Berkshire Hathaway.
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