NEW YORK (TheStreet) -- VeriSign (VRSN - Get Report) has been downgraded to "market perform" from "outperform," Wells Fargo said Friday. The firm said the slowdown in domain name growth leads to decreases in revenue, operating income and free cash flow.
Separately, TheStreet Ratings team rates VERISIGN INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate VERISIGN INC (VRSN) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, increase in stock price during the past year, increase in net income and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- VRSN's revenue growth trails the industry average of 21.3%. Since the same quarter one year prior, revenues slightly increased by 5.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The gross profit margin for VERISIGN INC is currently very high, coming in at 87.13%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 37.95% significantly outperformed against the industry average.
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- The net income growth from the same quarter one year ago has exceeded that of the Internet Software & Services industry average, but is less than that of the S&P 500. The net income increased by 11.7% when compared to the same quarter one year prior, going from $84.51 million to $94.42 million.
- VERISIGN INC has improved earnings per share by 23.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, VERISIGN INC increased its bottom line by earning $3.54 versus $1.91 in the prior year. For the next year, the market is expecting a contraction of 24.9% in earnings ($2.66 versus $3.54).
- You can view the full analysis from the report here: VRSN Ratings Report