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Berkshire Hathaway increased its stake in VeriSign in the final days of 2024, its largest holding in an internet stock.
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VeriSign, a domain registry, is poised for growth 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.
Citi analysts called Berkshire Hathaway’s larger Internet shareholding a “top pick” for 2025.
VeriSign is Berkshire Hathaway’s largest internet stock and the conglomerate increased its stake in the final days of 2024.
Warren Buffett’s conglomerate owns a $2.7 billion stake in VeriSign and is the company’s largest shareholder, with nearly 14% of it.
VeriSign provides domain registration and listing services and operates crucial Internet infrastructure. Founded in 1995, it is the only registry for .com and .net domains and operates two of the 13 global Internet root servers.
According to Citi analysts, VeriSign is poised for a strong 2025. Citi assigned a price target of $238, representing a potential 16% upside from current levels. In its bullish scenario, Citi sees VeriSign rising to $312, representing a potential gain of just over 50%.
“We consider Verisign to be one of the safest bets on the Internet with a more limited range of results given its almost utility nature as a domain registry, its ability to pass on regular price increases leading to a resilient top line and the best in best-in-class EBITDA margins, providing what we believe is attractive risk/reward for investors,” Citi says.
VeriSign is one of the most profitable companies in the S&P 500.
According to financial data for the third quarter, the company occupies fifth place in the ranking S&P 500 for the highest profit margin, around 56%, tied with Nvidia. In terms of operating margin, VeriSign ranks third and in terms of gross margin, it ranks 13th.
Citi said it is 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 way, and with pricing questions now behind us, VRSN’s discount to its all-time peak will become a more bullish factor,” Citi said.
VeriSign had a rough year, with shares up just 2% compared to a 23% gain for the S&P 500. Meanwhile, the stock is down about 20% from its all-time high reached in December 2021.
That left VeriSign trading at a price-to-earnings ratio of about 24 times, which is in line with its 15-year historical average. VeriSign’s price-earnings premium relative to the S&P 500 is 27% below its 15-year average and 52% below its peak.