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VeriSign Inc - Stock Quote VRSN

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Morningstar's VeriSign Inc Stock Analysis

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Verisign Shares Tank on Downgraded Outlook and Cybersecurity Fears, Providing Rare Window to Buy

Emma Williams Equity Analyst

Analyst Note

| Emma Williams |

We maintain our $215 fair value estimate for wide-moat Verisign despite tapering pandemic-era tailwinds, geopolitical unrest, and challenging macroeconomic conditions that weighed on first-quarter domain registration growth. This was illustrated by a 12% decline in new .com and .net domain names registered during the quarter relative to the prior year. Following a weak start to the year, management downgraded its full-year domain growth expectations and marginally trimmed revenue guidance. However, our forecasts are unchanged, including expected domain base growth of 3% in 2022, which is at the top end of updated guidance. We believe the market has overreacted to the guidance downgrade and fears of cybersecurity attacks affecting Verisign’s system stability, creating a compelling opportunity for investors to buy shares in a high-quality business. Verisign is currently trading at a rare 15% discount to our fair value estimate.  

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VeriSign Inc's Company Profile

Business Description

Verisign is the sole authorized registry for several generic top-level domains, including the widely utilized .com and .net top-level domains. The company operates critical internet infrastructure to support the domain name system, including operating two of the world’s 13 root servers that are used to route internet traffic. In 2018, the firm sold its Security Services business, signaling a renewed focus on the core registry business.

12061 Bluemont Way
Reston, VA, 20190
T +1 703 948-3200
Sector Technology
Industry Software - Infrastructure
Most Recent Earnings Mar 31, 2022
Fiscal Year End Dec 31, 2022
Stock Type Classic Growth
Employees 904

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