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On Monday, JPMorgan analyst Philip Cusick revised the price target for Cogent Communications (NASDAQ:CCOI) stock, lowering it to $62.00 from the previous $76.00, while keeping a Neutral rating on the company. The stock, currently trading at $48.93, has declined over 35% year-to-date. According to InvestingPro data, the company operates with a significant debt burden of $2.38 billion, though its current ratio of 1.49 indicates sufficient liquidity to meet short-term obligations. The adjustment follows Cogent’s report of weaker first-quarter results, which included a decline in revenue due to the termination of unprofitable Sprint deals and a dip in EBITDA, despite the company achieving all of its Sprint-related deal savings to date, totaling $220 million.
Cogent now anticipates realizing $240 million in cost savings by the second quarter of 2026. Cusick noted that while the company’s Waves revenue in the first quarter of 2025 fell short at $7 million compared to the expected $9 million, due to fewer installations towards the end of the quarter, he expects a more balanced pace of installations in the second quarter of 2025. Consequently, the revenue forecast for Waves in 2025 has been reduced to $44 million from $57 million.
Despite the decreased revenue projections, Cogent’s data center monetization efforts are advancing, with four letters of intent currently moving towards initial contract negotiations. The lease negotiations are reportedly close to the asking price of $1 million per megawatt. Cusick expressed optimism about the potential data center monetization, which could be positively received in light of concerns over the company’s leverage. InvestingPro analysis reveals that Cogent has maintained dividend payments for 14 consecutive years, currently offering an attractive 8.26% dividend yield.
The analyst also commented on Cogent’s decision to slow the growth of its quarterly dividend, stating that while it is a positive move, an outright pause would have been preferable given the leverage concerns. The revised December 2025 price target of $62 implies a 12.4x 2026 estimated EV/EBITDA multiple, compared to the 12.8x 2025 estimated multiple at current levels. InvestingPro data shows the company currently trades at an EV/EBITDA multiple of 34.13x, suggesting potential valuation concerns. Subscribers can access 12 additional ProTips and a comprehensive Pro Research Report for deeper insights into Cogent’s financial health and market position.
In other recent news, Cogent Communications Holdings Inc. reported its first-quarter 2025 earnings, which revealed a miss on both earnings per share (EPS) and revenue compared to analyst forecasts. The company’s EPS was -1.09 USD, falling short of the forecasted -1.05 USD, while revenue reached 247 million USD, missing the projected 251.36 million USD. Despite these results, Cogent saw a 1.9% increase in EBITDA as adjusted, reaching 68.8 million USD, and a significant improvement in gross margin by 790 basis points from the previous year. Additionally, the company announced updates following its Annual Meeting, including amendments to its incentive award plan and bylaws, and the election of directors. Cogent’s stockholders approved an increase in shares available for issuance by 1.5 million shares and extended the date for awards under the plan to May 7, 2035. Furthermore, the company ratified the appointment of Ernst & Young LLP as its independent registered public accountants for the fiscal year ending December 31, 2025. The company also noted a 14% year-over-year increase in revenue from wavelength services, despite facing challenges such as increased SG&A expenses due to seasonal factors. Lastly, Cogent maintains a long-term annual revenue growth target of 6-8% and aims for an EBITDA margin expansion of 50 basis points annually.
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