VeriSign falls after Baird cuts to 'neutral' on lower domain growth

VeriSign,

11/07/2023 15:28

(Update)
    ** Baird downgrades domain name registry services provider
VeriSign Inc  VRSN.O  to "neutral" rating
    ** Stock down 4% at $215 in morning trading 
    ** Brokerage sees less upside to shares in near term due to
weaker domain growth trends, which could drive further reduction
in domain guidance for the year
    ** Co in Q1 closed with 354 mln domain name registrations
across all top-level domains, an increase of 1% compared with Q4
2022
    ** Believes sluggishness is likely due to factors including
weaker small business sentiment and lower contribution from
China, where the reopening has been weaker than expected
    ** Baird notes current valuation of ~25.5x NTM FCF compares
with ~27x average since 2018, which reflects a period of higher
domain growth; thus we are challenged to argue for multiple
expansion
    ** VRSN is set to report Q2 after markets close on July 27
    ** Brokerage lowers price target to $245 from $265
    ** VeriSign stock up 9.5% YTD

 (Reporting by Roshan Abraham and Zaheer Kachwala)
 ((Roshan.Abraham@thomsonreuters.com))