Verisign is a monopoly compounder that is just about to have pricing power, after having none for the last 8 years. Incremental operating margins are ~85%, both on volume and price growth.
The business is relatively simple and has similar characteristics to AMT, CCI in terms of certainty of growth, and almost all costs are fixed.
We think the market is missing the longevity of price increases, the power of compounding 5% price increases, and how low the risk to FCF growth is.
Potential Upside: $285 (+37%)
Sensible Downside: $171 (-17%), based on 1% volume growth, 8% cost of capital.
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