UPDATE: Pivotal Research Group Initiates Coverage on Cogent Communications Group with Buy Rating, $26.50 PT

In a report published Wednesday, Pivotal Research Group initiated coverage on Cogent Communications Group

with a Buy rating and $26.50 price target. Pivotal Research noted, “We expect topline revenue growth to accelerate in 2013 vs. artificially low 2012 levels. Improving EBITDA margins and lower capital intensity of the business should drive improving equity free cash flow growth in 2013. Given its low leverage, $237 million in cash on its balance sheet, and $38 million+ of equity free cash flow in 2013 based on our estimates, we think CCOI is set to return more capital to shareholders. We initiate with a BUY rating and $26.50 price target, implying 22% upside from current levels (including dividends.)” Cogent Communications Group closed on Tuesday at $22.03.