Why We Believe VeriSign’s Stock Is Worth $101

by Trefis Team
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VeriSign‘s (NASDAQ:VRSN) stock price increased by around 50% in 2017, despite a comparatively marginal jump in its top line and bottom line performance through the year, which is a testament to its prime position in the highly regulated .com and .net domain industry. Earlier in 2017, Verisign renewed its .net Registry Agreement with the Internet Corporation for Assigned Names and Numbers (ICANN), and will remain the sole registry operator for the .net registry for the next 6 years with a contractual right to increase the fees by up to 10% each year. As more and more companies rely on digitally growing their business, Verisign’s strong position in the domain registration market will help it grow in the near term.

Our price estimate for Verisign is slightly below the current market price. We have also created an interactive dashboard which shows the forecast trends; you can modify the key value drivers to see how they impact the company’s revenues, bottom line and valuation.

We expect 4% revenue growth in 2018 to $1.21 billion, driven by 2.5% growth in domain registrations and 1.5% growth in average price per domain.







In a move to increase its market share and consolidate its dominant position in the industry, Verisign ramped up its marketing efforts. This should lead to a slight increase in expenses, however, a significant growth in revenues should boost the overall EBIT. Additionally, with the recently introduced corporate tax, we expect a significant boost to its net income.

We have used a P/E ratio of 26 for our valuation estimate, but you can modify the multiple in order to come up with your own valuation estimate for the company.

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