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Berkshire Hathaway increased its stake in VeriSign, the largest internet stock holding, in the final days of 2024.
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VeriSign, a domain registrar, is poised for growth in 2025 with a $238 price target from Citi.
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VeriSign is one of the most profitable companies in the S&P 500.
Berkshire Hathaways The largest internet stock holding was called a “top pick” for 2025 by analysts at Citi.
VeriSign is Berkshire Hathaway and the conglomerate’s largest internet stock increased its stake in the last days of 2024.
Warren Buffett’s conglomerate has a $2.7 billion stake in the company VeriSign and is the company’s largest shareholder, owning almost 14% of the company.
VeriSign provides domain registration and listing services and manages critical Internet infrastructure. Founded in 1995, it is the only registry for .com and .net domains and operates two of the thirteen global Internet root servers.
According to Citi analysts, VeriSign is poised for a solid 2025. Citi has set a price target of $238, which represents a potential upside of 16% from current levels. In the bull case scenario, Citi sees VeriSign rising to $312, representing a potential upside of just over 50%.
“We consider Verisign to be one of the more secure ways on the Internet with a more limited range of results, given its almost useful nature as a domain registration, the ability to pass regular price increases that lead to resilient revenue, and best-in-class EBITDA- margins, which we believe provides attractive risk/return for investors,” Citi says.
VeriSign is one of the most profitable companies in the S&P500.
According to third-quarter financial data, the company ranks fifth in the rankings S&P500 for the highest profit margin, about 56%, on par with Nvidia. VeriSign ranks third for operating margin and 13th for gross margin.
Citi said this is encouraged by recent monthly growth in .com domain registrations, which could point to year-over-year growth in 2025.
“If trends continue to stabilize in this manner, and with pricing in mind, VRSN’s discount to its historical peak will become a more bullish driver,” Citi said.
VeriSign had a rough 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 December 2021 record high.
As a result, VeriSign traded at a price-to-earnings ratio of about 24x, which matches its 15-year historical average. VeriSign’s price-to-earnings premium versus the S&P 500 is 27% below the 15-year average and 52% below the peak.