Cogent Communications Holdings, Inc. (CCOI):
We came across a bullish thesis on Cogent Communications Holdings, Inc. on Stock Analysis Compilation’s Substack. In this article, we will summarize the bulls’ thesis on CCOI. Cogent Communications Holdings, Inc.'s share was trading at $47.92 as of July 21st. CCOI’s trailing and forward P/E were 94.04 and 5.00k, respectively according to Yahoo Finance.
A high-speed internet connection providing fast data rates to customers.
Cogent Communications Inc. is positioned for meaningful upside as its wavelength circuit build-out accelerates, even as investor sentiment remains weighed down by the protracted Sprint wireline integration. The company’s shares have struggled after several quarters of earnings misses, with revenue yet to inflect and integration efforts still absorbing operating expenses, despite management achieving the targeted $220 million in cost savings.
Beneath these near-term headwinds, Cogent’s wavelength activation pipeline is gaining traction, with a backlog of 3,433 orders and a unique capability to bring circuits online in as little as two weeks, a stark advantage over competitors such as Lumen and Zayo, who typically require three to nine months. This rapid deployment should translate into share gains as installations scale, with management targeting a steady pace of approximately 500 activations per month by year-end.
With average revenue per unit around $1,930 and incremental EBITDA margins exceeding 90% due to minimal variable costs, the company could generate more than $100 million in incremental cash flow annually once fully ramped. While near-term results remain clouded by integration-related expenses and delayed revenue contributions, the backlog conversion offers a clear path to meaningful cash flow growth and a rerating of the stock.
Should the expected installations and resulting cash flow not materialize in the coming quarters, an exit would be warranted, but for now, the market’s fixation on integration challenges leaves significant upside as Cogent leverages its operational speed to expand wavelength scale and unlock high-margin growth.
Previously, we covered a bullish thesis on Cogent Communications Holdings, Inc. (CCOI) by Aaron Chan in January 2025, highlighting its transformative ROADM-enabled wavelength network and growth potential. The stock has depreciated ~34% since, as Sprint integration delays deferred revenue inflection. The thesis holds as backlog momentum builds. Stock Analysis Compilation shares a similar view, stressing near-term backlog conversion and cash flow upside.
Content Original Link:
" target="_blank">
