Shareholders might have noticed that Cogent Communications Holdings, Inc. (NASDAQ:CCOI) filed its third-quarter result this time last week. The early response was not positive, with shares down 3.1% to US$54.09 in the past week. Revenues came in at US$142m, in line with estimates, while Cogent Communications Holdings reported a statutory loss of US$0.11 per share, well short of prior analyst forecasts for a profit. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Following the latest results, Cogent Communications Holdings' 14 analysts are now forecasting revenues of US$596.1m in 2021. This would be a meaningful 8.5% improvement in sales compared to the last 12 months. Per-share earnings are expected to surge 155% to US$1.13. In the lead-up to this report, the analysts had been modelling revenues of US$599.6m and earnings per share (EPS) of US$1.13 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
With no major changes to earnings forecasts, the consensus price target fell 7.8% to US$68.20, suggesting that the analysts might have previously been hoping for an earnings upgrade. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Cogent Communications Holdings, with the most bullish analyst valuing it at US$90.00 and the most bearish at US$45.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Cogent Communications Holdings' growth to accelerate, with the forecast 8.5% growth ranking favourably alongside historical growth of 6.7% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 1.5% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Cogent Communications Holdings is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Cogent Communications Holdings' future valuation.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Cogent Communications Holdings going out to 2024, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 5 warning signs for Cogent Communications Holdings (2 make us uncomfortable!) that you should be aware of.
When trading Cogent Communications Holdings or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email email@example.com.