UBS Starts Cogent Communications (CCOI) at Buy

UBS analyst Christopher Schoell initiates coverage on Cogent Communications (NASDAQ: CCOI) with a Buy rating and a price target of $102.00.

The analyst comments: "We are initiating CCOI with a Buy rating and $102 PT. We believe Cogent is on the cusp of realizing the benefits of its prior Sprint wireline acquisition from T-Mobile (closed mid-23), including the transformation of a cash burning asset acquired for $1 into a growing/profitable wavelength business with a $2B TAM. Scaling in waves has been slower in '24 (key driver of sentiment), but we expect performance to inflect in '25+ as network reconfiguration comes to a close. We forecast a haircut to mgmt's 2028 wave revenue target in our base case given execution risk, but still look for $500M+ of total EBITDA in '28 (in-line with mgmt's goal; upside vs. street’s $464M and ~$345M in '24), supported by growth in legacy Cogent, stabilization of Sprint losses and wave growth at 80%+ margin. This drives a compelling growth trajectory (8%/40%+ rev/EBITDA CAGR ex TMUS reimbursements) and attractive return profile, fuelled by the creation of a profitable growth business on a low cost basis asset. Along with the potential monetization of data center/IPv4 assets, we believe Cogent is well positioned to lower leverage and sustain dividend growth."

For an analyst ratings summary and ratings history on Cogent Communications click here. For more ratings news on Cogent Communications click here.

Shares of Cogent Communications closed at $78.64 yesterday.

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