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    VeriSign Could Be In The $38 Domain On Upcoming Earnings Release

    VRSN_preferred logo_vertical_RGBVerisign is expected to announce its fiscal year 2011 Q2 earnings on July 28. We currently have a near $38 Trefis price estimate for Verisign, which implies around 15% upside to the current market price. Verisign recently renewed its contract with ICANN, which cements its position as the exclusive .com and .net domain registrar. It currently competes with other domain name registry providers like NeuStar, Employ Media, and Afilias to win new and maintain existing registry rights from ICANN.

    The company is also followed by investors in Internet security names like Symantec and Intel’s Mcfee as well as CDN provider Akamai

    Domain Registrations

    While the percentage market share of .com and .net domain names is expected to decrease, the number of total domain names will likely increase by a much higher percentage and reach almost 340 million by the end of the Trefis forecast period. The expected increase in domain registrations should improve Verisign's top line growth.

    [trefischart ticker=VRSN width=350 driver=0031]

    Improving Margins

    The company has also announced a hike in domain name prices, increasing .com prices by 7% and .net prices by 10%. This should help it improve operating profit margins in the short term. The price increase is expected to lead to only a marginal decrease in the number of .com and .net domain name registrations, as the hike isn’t substantial.

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    In line with its Q1 results, we expect Verisign to post positive results, improving its margins and increasing its net income faster than revenue.

    Check out our complete analysis of Verisign.

    Like our charts? Embed them in your own posts using the Trefis Wordpress Plugin.

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