DA Davidson Upgrades Cogent Communications (CCOI) to Buy; Strong Results, Improving Visibility

DA Davidson upgraded Cogent Communications (NASDAQ: CCOI) from Neutral to Buy, price target raised from $16 to $20.00.

DA analyst says, "We think CCOI will become consistently earnings positive from operations as shown in Q3. With a relatively fixed cost structure, continued top line growth at Cogent should fall to the bottom line as earnings. We are estimating $0.11 per share in earnings in 2011, $0.57 per share in 2012, and ~$0.94 per share in 2013. Our EPS and EBITDA estimates are significantly higher than consensus because of expanding margins. Cogent’s CEO thinks he can expand EBITDA margins 200bp per year. We are forecasting a little more conservatively than that with 190bp in 2012 and 40bp in 2013, but the consensus is not giving CCOI credit for any margin expansion."

For more ratings news on Cogent Communications click here and for the rating history of Cogent Communications click here.

Shares of Cogent Communications closed at $16.54 yesterday.

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