3 Implications Of Google Domain Registrations Every Web.com Investor Should Consider

Shares of Web.com Group (NASDAQ: WWWW) plummet more than 23.9 percent following the announcement of Google entering domain registrations.

Below are three implications that analysts commenting on Web.com shares shared in notes on Tuesday.

A "Manageable" Impact

In an earlier note, SunTrust analyst Robert Peck commented that he expects no near-term impact from Google Domains. Peck emphasized that there will likely be an intermediate term impact, but it will be "moderate/manageable."

SunTrust believes that Web.com will keep its existing clients as Google enters the sector. The analyst added that Google's move "validates" market opportunity and sees possible consolidation with Wix.com (NASDAQ: WIX) and Endurance International Group (NASDAQ: EIGI).

SunTrust maintained its Buy rating and $38.00 price target.

Google Domain Considered Positive for Registry Operators

JP Morgan analyst Sterling Auty reported that Google's starting domain registration service could be a positive for registry operators including VeriSign and Neustar.

Related Link: Why Google Shares Are Trading Up

Auty wrote that VeriSign and Neustar could provide the back-end infrastructure of domain names given the "larger, financially healthy registrars that can invest to drive new registrations is positive for registry operators."

The firm added that Google has only begun a limited beta test for the domain registration. Auty remarked that the company has sold domain names for "some time" and hasn't truly impacted Web.com growth.

JP Morgan maintains an Overweight rating on Web.com.

Near-Term Overhang Appears Risky for B. Riley

B. Riley downgraded shares of Web.com from Buy to Neutral on the near-term overhang from Google.

Analyst Sameet Sinha reported that Google will partner with site builders including Wix, Squarescape, Weebly, and Shopify to provide value-added services. Sinha's note drove up Wix.com shares up as much as 9.3 percent.