2023-08-11 08:56:54 ET
Cogent Communications ( NASDAQ: CCOI ) shares rose nearly 2% in pre-market trading on Friday as investment firm T.D. Cowen upgraded the internet service provider, citing "underappreciated opportunities" in the wavelength market.
Analyst Gregory Williams, who raised his rating on Cogent Communications ( CCOI ) shares to outperform from market perform, said that while the company's recent quarterly results were "most in line," the opportunity it will get from wavelength - believed to be worth at least $700M in seven years - is "too hard to ignore. Currently, Cogent Communications' ( CCOI ) wavelength business is worth roughly $10M.
"Even at lesser Wave gains and mistakes along the way, we see meaningful stock appreciation," Williams wrote in an investor note. Williams also boosted his price target to $85 from $65.
In May, Cogent Communications ( CCOI ) acquired the Sprint GMG wireline assets.
Though the Wavelength opportunity in front of Cogent Communications ( CCOI ) is sizable, Williams said it will take time, as it will need up to 800 wave-ready data centers, an enormous boost from the roughly 30 it has today. Additionally, it will be going up against companies like Zayo and Lumen Technologies ( LUMN ), but Williams said Cogent's advantages include its network breadth and unique routes can help cut down provisioning time, allow it to price aggressively and accept lower margins.
Analysts are universally bullish on Cogent Communications ( CCOI ). It has a BUY rating from Seeking Alpha authors , while Wall Street analysts rate it a BUY . Conversely, Seeking Alpha's quant system, which consistently beats the market, rates CCOI a BUY .
More on Cogent Communications
- Alphyn Capital - Cogent: Exceptional Potential In Sprint's Former Business
- A Look At The Cogent Communications Deal With T-Mobile
- Unlocking Value: The Transformative Potential Of Cogent Communications
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Cogent Communications rises as TD Cowen upgrades, citing wavelength market