Citi: Cogent's 4Q Shows Solid Margin Expansion

In a research report released earlier today, Citi notes that Cogent Communications Group's CCOI 4Q results were solid from a margin perspective, despite soft revenue. “However, the shortfall on revenue could lead the share price to trade lower given the rally into 4Q results. We retain a constructive view of its business model and competitive positioning, while we retain our Neutral stance on Cogent shares, which is largely based on its relative valuation (trading at 8.8x our '12 OIBDA estimate vs. peer group at 7.7x), limited upside potential to 2012 consensus estimates, in our view, and the likelihood that the company maintains a measured approach to repatriating cash to shareholders in the near-term,” Citi said in the report. Citi maintains its Neutral rating and $17 PT on Cogent, which is currently trading at $17.98.