UPDATE: DA Davidson Downgrades Cogent Communications Group to Underperform

DA Davidson reduced its rating on Cogent Communications Group

from Neutral to Underperform as it sees the company's valuation high and its outlook into 2013 dimming. DA Davidson noted, "CCOI's stock price has levitated since its Q2 announcement and it is now the most expensive competitive telecom stock in the CLEC universe at 11.1x 2012 and 9.1x 2013 EV/EBITDA estimates. We think CCOI's valuation has been buoyed by expectations that it may be one of the next consolidation targets in the industry, but we think XO and some of the regional CLECs may find buyers before CCOI. An insider sale of stock in mid-September (not through a 10B5-1 program) showed that no M&A discussions were underway." Cogent Communications Group closed at $21.19 on Thursday.