Cogent Communications Holdings Inc CCOI 0.23% shares were seen up 1.1 percent on Friday after Deutsche Bank initiated coverage of the telecom stock at Buy and set a $48 price target. According to Deutsche Bank analyst Matthew Niknam, Cogent has the rare combination of double-digit growth expectations, accelerating profitability and increasing shareholder returns. Especially in the telecom space, Niknam said companies that can deliver on all three of those fronts are few and far between.
“We view CCOI as a beneficiary of key industry tailwinds (pure play on fiber-based, IP traffic growth), with company-specific drivers (cost efficiencies, declining capital intensity) further bolstering FCF,” Niknam explained.
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He said Cogent’s growth prospects stand out against a backdrop of telecom companies whose secularly declining businesses may soon put their dividends at risk.
Deutsche Bank is currently projecting a 10 percent revenue compound annual growth rate from Cogent over the next three years. The firm is also projecting EBITDA CAGR of 15 percent in that same time. This strong growth outlook also means the stock’s generous 3.9 percent should be completely safe.
In fact, the firm is projecting…
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