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Cogent Communications Holdings Inc CCOI

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Cogent Is Moving Toward a Normalized Post-Pandemic Environment, but It’s Very Slow Going

Matthew Dolgin, CFA Equity Analyst

Analyst Note

| Matthew Dolgin, CFA |

The pandemic was a boon to Cogent’s netcentric business, which carries Internet traffic, while crushing the firm’s corporate business, which provides Internet and VPN connections in office buildings. Third-quarter results showed signs of each business moving toward equilibrium, but corporate revenue and corporate customer count still both declined, and we don’t think the corporate business will return to pre-pandemic growth rates any time soon. We are maintaining our forecast and $65 fair value estimate.

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Company Profile

Business Description

Cogent carries over one fifth of the world's Internet traffic over its network and is an Internet service provider for businesses. Cogent's corporate customers are in high-rise office buildings, and the firm provides them with two types of connections: dedicated Internet access, which connects them to the Internet, and virtual private networking, which offers an internal network for employees in different locations. Cogent's corporate customers are exclusively in North America and account for two thirds of the firm's revenue. Cogent's netcentric customers include Internet service providers and content providers, to which Cogent provides Internet transit. They hand traffic to Cogent in data centers and rely on Cogent to deliver it. About half of netcentric revenue is from outside the U.S.

Contact
2450 N Street North West
Washington, DC, 20037
T +1 202 295-4200
Sector Communication Services
Industry Telecom Services
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type High Yield
Employees 1,031