After rising 17 percent over the past year versus a 12 percent gain in the S&P 500 index, Deutsche Bank says now is the time to no longer be buyers of Cogent Communications Holdings Inc CCOI stock.
The Analyst
Deutsche Bank's Matthew Niknam downgraded Cogent Communications from Buy to Hold with a price target lifted from $50 to $41.
The Thesis
A downgrade is strictly due to the stock's outperformance versus the broader index and nothing to do with the company's outlook, Niknam said in a note. Specifically, the two positive attributes to support the prior bullish stance remain unchanged: expectations for above average organic revenue and free cash flow growth, and the potential for accelerating shareholder returns.
Cogent's first-quarter earnings report came in relatively in-line with expectations and "do not detract" from the longer-term story as the analyst's revenue and adjusted EBITDA estimates were lifted by 1 to 3 percent.
The communication company's stock is now trading at a 14.8x multiple on 2018E adjusted EBITDA and 13.5x on 2019 estimates, however, both of which stand above the historical average of 12.6x and 13.7x average over the past five years, the analyst wrote.
Price Action
Shares of Cogent Communications were trading lower by 1.7 percent Friday at $48.25.
From Double-Digit Growth To Dividend Hikes, Cogent Communications Has It All
Benzinga's Top Upgrades, Downgrades For May 4, 2018
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
date | ticker | name | Price Target | Upside/Downside | Recommendation | Firm |
|---|
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
