Cogent Communications Valuation Under Pressure as Growth Lags Due to Slower Sprint Integration, BofA Says

10:51 AM EDT, 08/21/2024 (MT Newswires) -- Cogent Communications Holdings (CCOI) has failed to materialize expected growth in the wavelength business on schedule after its acquisition of Sprint Wireline in May 2023 and, despite the sector holding long-term potential, "the delayed outlook does not support current valuation levels," BofA Securities said in a note to clients Wednesday.

The integration and monetization of the acquired assets have been slower than expected, BofA analyst David Barden said.

BofA downgraded its rating on Cogent's stock to underperform from neutral and reduced the price target to $65 from $75.

Shares of the company fell 2.6% in recent Wednesday trading.

Price: 72.76, Change: -1.97, Percent Change: -2.64