Last Update 08 Nov 25
Fair value Decreased 2.80%VRSN: Strong Quarterly Results Will Drive Renewed Optimism Despite Bearish Sentiment
Analysts have lowered their fair value estimate for VeriSign from $304 to $295.50 per share. They cite updated forecasts and a refined assessment of domain-related revenue drivers following the company’s recent quarterly performance and related market commentary.
Analyst Commentary
Analysts have provided a range of views on VeriSign's recent performance and outlook, with particular focus on valuation, growth opportunities, and operational execution. Their commentary highlights both areas of optimism and ongoing caution regarding the company's prospects.
Bullish Takeaways
- Bullish analysts note that VeriSign delivered strong third-quarter results, surpassing prior expectations and signaling solid operational execution.
- They highlight management's updated guidance on domain growth as a positive indicator for future revenue streams and market stability.
- Current share levels are seen as creating an attractive entry point for investors. Upside potential exists if growth and execution remain on track.
- Ongoing reassessment of advertising and promotional activity is viewed as a manageable risk that has already been partially addressed in guidance and commentary.
Bearish Takeaways
- Bearish analysts express concern over changes in parked domain advertising, which could impact a key revenue source and weaken future growth trajectories.
- There are reservations about the quality of domain additions, with increased promotional activity potentially leading to lower-quality registrant trends.
- Some remain cautious following recent model updates that reflect exposure to shifts in online advertising arrangements. This adds uncertainty to the near-term outlook.
- Despite constructive management commentary, the stock has traded lower post-earnings, highlighting persistent skepticism among some market participants.
What's in the News
- VeriSign completed a share repurchase tranche between July 1 and September 30, 2025. The company bought back 763,000 shares, or 0.82% of its shares, for $215.07 million (Key Developments).
- Since initiating its buyback program on February 5, 2015, the company has repurchased a total of 55,917,000 shares. This represents 52.04% of shares for $8,367.95 million (Key Developments).
Valuation Changes
- The Fair Value Estimate has decreased from $304 to $295.50 per share following updated analysis.
- The Discount Rate has risen slightly from 9.08% to 9.17%.
- The Revenue Growth outlook remains essentially unchanged at approximately 4.69%.
- The Net Profit Margin is stable, with a negligible change from 51.86% to 51.86%.
- The future P/E multiple has fallen slightly from 33.8x to 33.0x.
Key Takeaways
- Improving domain registration trends and successful marketing strategies may drive future revenue growth.
- Pursuing .web registry operations could enhance revenue potential, contingent on overcoming regulatory hurdles.
- VeriSign's financial stability and strategic initiatives, including dividends, buybacks, and effective refinancing, position it for positive revenue growth and investor confidence.
Catalysts
About VeriSign- Provides internet infrastructure and domain name registry services that enables internet navigation for various recognized domain names worldwide.
- VeriSign is experiencing sequentially improving trends in domain name registrations, with new registrations and renewal rates increasing, potentially boosting revenue growth in the coming quarters.
- The company is implementing new marketing programs which are showing early signs of success in increasing domain registrations, possibly enhancing revenue streams as these programs gain traction.
- Initiating and maintaining a quarterly cash dividend could lead to a perception of stability and maturity in the company’s financial practices, potentially impacting net income stability by distributing more predictable returns to shareholders.
- Improved domain base trends, notably in key geographical areas such as the U.S., EMEA, and Asia Pacific, suggest potential for future revenue growth if these trends continue and expand.
- VeriSign's intention to become the registry operator for .web could open a new revenue avenue if regulatory and legal challenges are overcome, possibly impacting overall earnings positively in the long run.
VeriSign Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming VeriSign's revenue will grow by 6.4% annually over the next 3 years.
- Analysts assume that profit margins will increase from 50.0% today to 53.0% in 3 years time.
- Analysts expect earnings to reach $1.0 billion (and earnings per share of $12.19) by about September 2028, up from $799.5 million today.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 33.3x on those 2028 earnings, down from 33.4x today. This future PE is greater than the current PE for the US IT industry at 29.0x.
- Analysts expect the number of shares outstanding to decline by 2.81% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 9.01%, as per the Simply Wall St company report.
VeriSign Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- VeriSign's strong start to the year, with a solid increase in the domain name base, suggests positive trends and an increase in new registrations and renewal rates, potentially supporting revenue growth.
- The company's decision to introduce a cash dividend reflects confidence in its financial stability and strength, which could enhance investor appeal and support earnings stability.
- The company's marketing programs and registrar engagement initiatives are showing promising results, potentially leading to increased customer acquisition and impacting revenue positively.
- The issuance of new senior notes to refinance maturing ones at the same interest rate indicates effective cash management and financial stability, which supports net income and profitability.
- The company's strategic return of excess cash to shareholders through dividends and buybacks demonstrates confidence in sustained cash flows and earnings growth.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $309.0 for VeriSign based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $340.0, and the most bearish reporting a price target of just $250.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.9 billion, earnings will come to $1.0 billion, and it would be trading on a PE ratio of 33.3x, assuming you use a discount rate of 9.0%.
- Given the current share price of $285.71, the analyst price target of $309.0 is 7.5% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
How well do narratives help inform your perspective?
Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Read more narratives
