Last Update 06 Dec 25

VRSN: Strong Q3 Execution Will Drive Confidence Despite Parked Domain Risks

Analysts have modestly trimmed their price target on VeriSign to $325 from $340, reflecting slightly higher discount rate assumptions. They also highlight resilient fundamentals, clearer visibility into AdSense exposure, and Q3 results that counter recent bearish narratives and support the shares as an attractive entry point.

Analyst Commentary

Recent research updates underscore a generally constructive stance on VeriSign, even as some concerns linger around revenue quality and advertising exposure. Bullish analysts point to strong execution in Q3, improved visibility into key risk areas, and valuation support at current levels. Bearish analysts, meanwhile, remain focused on potential headwinds tied to parked domain monetization and promotional domain activity.

Bullish Takeaways

Stronger than expected Q3 performance and increased domain guidance reinforce confidence in VeriSign's ability to sustain midterm growth and support a premium multiple.
Management commentary around AdSense exposure has provided clearer guardrails on downside scenarios, helping analysts refine models and maintain confidence in cash flow durability.
Current share price, well below revised target levels, is viewed by bullish analysts as an attractive entry point given the combination of resilient fundamentals and high operating leverage.
The modest reduction in target price, driven largely by higher discount rate assumptions rather than a weaker operating outlook, suggests that long term valuation support remains intact.

Bearish Takeaways

Bearish analysts continue to flag risk that changes in parked domain advertising economics could pressure ancillary revenue and limit upside to growth expectations.
Concerns persist that elevated promotional activity may drive lower quality domain additions, potentially impacting renewal rates and the sustainability of reported unit growth.
The stock's sensitivity to shifts in digital advertising demand and partner policies is seen as a structural overhang that could justify a valuation discount versus high quality software peers.
Some investors remain cautious that, despite reassuring Q3 commentary, visibility into the pace and magnitude of any monetization changes is still incomplete, keeping execution risk on the radar.

What's in the News

Completed a new buyback tranche between July 1 and September 30, 2025, repurchasing 763,000 shares, or 0.82 percent of shares outstanding, for $215.07 million (company filing).
Since launching its repurchase program on February 5, 2015, VeriSign has cumulatively bought back 55,917,000 shares, representing 52.04 percent of shares, for a total of $8.37 billion (company filing).

Valuation Changes

Fair Value: Unchanged at approximately $295.50, indicating no revision to the intrinsic value estimate.
Discount Rate: Risen slightly from about 9.11 percent to 9.20 percent, reflecting a modestly higher required return.
Revenue Growth: Essentially unchanged, inching up marginally from roughly 4.69 percent to 4.69 percent on a projected basis.
Net Profit Margin: Flat at about 51.86 percent, with changes too small to be economically meaningful.
Future P/E: Edged up slightly from approximately 34.50x to 34.59x, implying a marginally higher valuation multiple on forward earnings.

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.What are the underlying business or industry changes driving this perspective?

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.

Have other thoughts on VeriSign?

Create your own narrative on this stock, and estimate its Fair Value using our Valuator tool.

Create Narrative

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.

Cautious Outlook Will Shape Domain Momentum And Share Buybacks Ahead