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Berkshire Hathaway increased its stake in VeriSign in the final days of 2024, its largest internet stock holding.
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VeriSign, a domain registry, is set to grow in 2025 with a price target of $238 from Citi.
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VeriSign is one of the most profitable companies within the S&P 500.
Berkshire Hathaway's the biggest internet stock holding was called a “top pick” for 2025 by analysts at Citi.
VeriSign is Berkshire Hathaway's largest internet stock, and the conglomerate increase its share in the last days of 2024.
Warren Buffett's conglomerate owns a $2.7 billion stake in it VeriSign and is the company's largest shareholder, owning almost 14% of the company.
VeriSign provides domain registration and listing services and operates critical 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 solid 2025. Citi gave a price target of $238, which represents a potential upside of 16% from current levels. In its bull case scenario, Citi sees VeriSign rising to $312, which represents a potential upside of just over 50%.
“We view Verisign as one of the safer plays in the Internet with a narrower range of outcomes given its almost utility-like nature as a domain registry, the ability to pass on regular price increases that result in a resilient top line , and best in class EBITDA margin, providing what we believe is an attractive risk/reward for investors,” Citi said.
VeriSign is one of the most profitable companies in the S&P 500.
According to financial data from the third quarter, the company is fifth in the S&P 500 for the highest profit margin, which is around 56%, tied with Nvidia. For operating margin, VeriSign ranks third, and for gross profit, it ranks 13th.
Citi said it was encouraged by recent month-on-month growth in .com domain registrations, which could point to year-over-year growth in 2025.
“If trends continue to stabilize like this, and with valuation questions now in the rear view, VRSN's decline to its historic high will become more of a bullish driver,” Citi said.
VeriSign had a tough year, with the stock 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 in December 2021.
That leaves VeriSign trading at a price-to-earnings ratio of about 24x, which is in line with its 15-year historical average. VeriSign's price-to-earnings premium relative to the S&P 500 is 27% below its 15-year average and 52% below its peak.