Wells Fargo Upgrades Cogent Communications Group (CCOI) to Outperform; Valuation Compelling Vs. Peers

November 23, 2009 7:06 AM EST

Wells Fargo upgrades Cogent Communications Group (Nasdaq: CCOI) from Market Perform to Outperform. Increasing valuation range to $11-12, from $10-11.

Wells analyst says, "While we would characterize the main rationale for our upgrade as one focused on valuation, we do believe many investors were overly negative in looking at the company’s Q3 performance. In our view, management continues to be opportunistic in investing in the business. While this may cause some near term volatility in results, we believe such moves should lead to tangible margin expansion in 2010...We believe the company has continued to be opportunistic in investing in its business (both on the network and sales side). This should serve it well in 2010 and should help drive margins...Management has a solid track record of being opportunistic with the purchase of distressed assets. We believe the benefits of this strategy will be seen in 2010 when we expect CCOI to realize meaningful margin expansion."

To see all the upgrades/downgrades on shares of CCOI, visit our Analyst Ratings page.

Cogent Communications Group, Inc., together with subsidiaries, provides high-speed Internet access and Internet Protocol, or communications services to small and medium-sized businesses, communications service providers, and other bandwidth-intensive organizations.

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