Cogent Communication Price Target Raised at RBC Capital following Q4 Report

Citi reaffirmed its Buy rating and $15 price target on Cogent Communications (NASDAQ:CCOI), highlighting a highly favorable risk/reward profile ahead of pivotal data expected in July from the registrational Part 2 of the Phase 2 SUMMIT trial testing bezuclastinib in non-advanced systemic mastocytosis (NonAdvSM).

According to Citi, the market has effectively priced out a successful readout since Part 1 results, failing to recognize the potential for bezuclastinib to outperform Blueprint’s Ayvakit both in efficacy and safety. The firm’s scenario analysis suggests investors are overestimating the likelihood of severe safety issues and underestimating the chance of meaningful efficacy gains.

Citi’s base case projects at least 50% upside from current levels, expecting bezuclastinib to deliver 75–100% greater efficacy than Ayvakit with an acceptable safety profile. With shares near lows, the analysts see the setup as compellingly asymmetric to the upside and has opened a 30-day Upside Catalyst Watch, anticipating a major revaluation if results meet or exceed expectations.

Cogent Communications (NASDAQ:CCOI) shares fell more than 10% since the company reported Q1/23 earnings earlier this month. Revenues came in at $116.1 million, compared to the Street estimate of $116.6 million and adjusted EBITDA of $56.5 million, compared to the Street estimate of $58.2 million.

On-net ARPU (average revenue per user) increased 0.6% quarter-over-quarter to $467 and Off-net ARPU declined to 0.5% quarter-over-quarter to $910. Churn rates for On-net and Off-net connections were relatively stable quarter-over-quarter at 1.0% each.

The acquisition of the Sprint wireline business closed on May 1, earlier than management’s expectations. RBC Capital analysts said they are cautiously optimistic, based on the potential for cost savings and revenue synergies, and earlier track record of integration.

Cogent Communications (NASDAQ:CCOI) shares fell more than 10% since the company reported Q1/23 earnings earlier this month. Revenues came in at $116.1 million, compared to the Street estimate of $116.6 million and adjusted EBITDA of $56.5 million, compared to the Street estimate of $58.2 million.

On-net ARPU (average revenue per user) increased 0.6% quarter-over-quarter to $467 and Off-net ARPU declined to 0.5% quarter-over-quarter to $910. Churn rates for On-net and Off-net connections were relatively stable quarter-over-quarter at 1.0% each.

The acquisition of the Sprint wireline business closed on May 1, earlier than management’s expectations. RBC Capital analysts said they are cautiously optimistic, based on the potential for cost savings and revenue synergies, and earlier track record of integration.

RBC Capital analysts raised their price target on Cogent Communication (NASDAQ:CCOI) to $66 from $61 following the company’s reported Q4 results, with revenues slightly better than expectations and EBITDA slightly below.

Q4 EPS came in at $0.02, worse than the Street estimate of $0.18. Revenue was $152 million, compared to the Street estimate of $151 million. Management has received all material approvals from regulatory agencies globally, which should allow the Sprint transaction to close in the middle of Q2/23, in management's view.

The Board increased the quarterly dividend by $0.01/share to $0.925/share, in line with the pace of the dividend increase in Q3.

Cogent Communication (NASDAQ:CCOI) shares rose more than 8% since the company’s reported Q3 results earlier this month, with revenue of $150 million coming in slightly better than the Street estimate of $149.9 million.

Management increased the quarterly dividend by $0.01/share to $0.915/share, a moderation from the historical pacing of $0.025/share. The Board slowed its pacing of dividend increases to better align with free cash flow growth.

Analysts at RBC Capital lowered their price target to $61 from $64 reflecting a more conservative EBITDA margin ramp and the slower dividend pacing impact.

For the full 2022-year, RBC Capital expects revenues/EBITDA of $599.0/$234.2 million (vs. previous $600.3/$237.0 million) and 2023 revenue/EBITDA of $628.7/$249.1 million (vs. previous $632.4/$256.1 million).

Cogent Communication (NASDAQ:CCOI) shares rose more than 8% since the company’s reported Q3 results earlier this month, with revenue of $150 million coming in slightly better than the Street estimate of $149.9 million.

Management increased the quarterly dividend by $0.01/share to $0.915/share, a moderation from the historical pacing of $0.025/share. The Board slowed its pacing of dividend increases to better align with free cash flow growth.

Analysts at RBC Capital lowered their price target to $61 from $64 reflecting a more conservative EBITDA margin ramp and the slower dividend pacing impact.

For the full 2022-year, RBC Capital expects revenues/EBITDA of $599.0/$234.2 million (vs. previous $600.3/$237.0 million) and 2023 revenue/EBITDA of $628.7/$249.1 million (vs. previous $632.4/$256.1 million).