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VeriSign Slumps After Wells Fargo Cuts Rating

NEW YORK (TheStreet) -- Shares of Internet infrastructure service provider VeriSign (VRSN) are sliding after Wells Fargo downgraded the stock in a note to investors earlier today.

WHAT'S NEW: VeriSign's domain name growth appears to be falling a bit lower than the midpoint of second quarter expectations and competition from new gTLDs could be influencing overall growth to some degree, Wells Fargo analyst Gray Powell wrote. Generic top-level domains, or gTLDs, are one of the categories of top-level domains maintained by the Internet Assigned Numbers Authority for use in the Domain Name System of the Internet. The company is tracking toward about 400K domain name additions in the upcoming quarter, which is lower than the 550K guidance midpoint, said the analyst, citing ICANN zone files. The analyst also noted that other domain names that will possibly be more popular haven't yet been launched. He downgraded the stock to Market Perform from Outperform and lowered his price target range on the shares to $51-$55 from $56-$60.

WHAT'S NOTABLE: Powell noted that Google's (GOOG) recently announced domain program could be a good thing for VeriSign, as small businesses buy more .com and .net web domains. However, the analyst said that if Google sells higher profile domains at larger discounts or gives them away for free, it could result in more competition to VeriSign's .com and .net domains starting late next year.

PRICE ACTION: In afternoon trading, VeriSign fell $1.53 or 3%, to $49.20.

Reporting by Gina Gioldassis

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