VeriSign Inc (NASDAQ: VRSN) has been in a sharp uptrend this year, having gained about 35% over the past four months – but the stock’s chart more recently has started showing signs of near-term exhaustion.
The company that operates as a domain name registry built on its gains rather significantly last week after reporting better-than-expected financial results for the first quarter.
Still, technical indicators suggest some near-term downside, indicating investors may now be better off taking some profit off the table in the VeriSign stock.
Note that VRSN is currently in the portfolio of legendary investor Warren Buffett.
Buffett is a long-term shareholder of VeriSign
Buffett has been invested in VeriSign since 2012, and his conglomerate Berkshire Hathaway has even raised its stake in VRSN from time to time.
The company based out of Reston, VA, is in line with Buffett’s preferences, given that it offers a strong competitive advantage and consistent cash flow.
Plus, it initiated a quarterly cash dividend of 77 cents a share last week as well.
In Q1, VeriSign saw its revenue increase by 4.7% on a year-over-year basis, helping its per-share earnings come in at $2.10 for the quarter.
Analysts, in comparison, had called for a marginally lower $2.09 a share.
That said, the relative strength index (RSI) of VRSN shares suggests they might wobble in the near term.
VRSN shares’ RSI has climbed into overbought territory
VeriSign stock’s relative strength index exceeded the closely-watched “70” reading last week.
In technical analysis, an RSI of more than 70 often indicates a stock is overbought.
It implies that buyer enthusiasm might be nearing its peak, often leading to a cooling-off period.
This suggests that investors should consider trimming their exposure to VeriSign stock after a more than 50% increase in the trailing 12 months, as it stands to see some weakness in the near term.
Investors should note, however, that RSI signals what might happen to VRSN shares in the near term, and is not at all an indication of their longer-term trajectory.
What Wall Street expects from VeriSign stock in 2025
Earlier in April, VeriSign guided for $5.825 billion to $5.925 billion in revenue for its full financial year.
At the time, Jim Bdizos, its chief executive, told investors:
VeriSign delivered solid results in the first quarter. As part of our ongoing commitment to return value to shareholders. I’m particularly pleased to announce the initiation of a quarterly cash dividend.
Investors should also note that Wall Street is not particularly bullish on VeriSign stock at the time of writing.
The consensus rating on VRSN shares currently sits at “hold”.
Analysts have an average price target of about $290 on VeriSign, which translates to about a 6% upside only from here.
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