Cogent hits annual low on 1Q loss and forecasts

Cogent stock fell 21.2 percent Friday after the company took a larger loss than analysts had expected. Revenue came up short of Wall Street estimates, and Cogent now expects a bigger loss for the full year. The company's second-quarter outlook was also below expectations.

Analysts from Cowen & Co. and RBC Capital Markets downgraded the stock to the equivalent of "Neutral" from "Buy," and shares fell $1.63, or 9.1 percent, to $16.26 in afternoon trading. Earlier, the stock tumbled to $15.54, its lowest price since December 2006.

Thomas Watts of Cowen said Cogent's disappointing first-quarter revenue, along with its outlook, shows that growth in the sector is slowing. He said the reason is slower growth of Internet traffic: YouTube and similar sites experienced powerful growth in 2006, and although those sites are still growing in popularity, their growth rates are slower.

He added that the company's full-year forecast "looks unachievable," as growth would have to be very strong in the third and fourth quarters to reach Cogent's target of 30 percent.

RBC analyst Jonathan Atkin agreed that the company will have trouble reaching its revenue estimates for the year. He cut his target price to $24 per share from $28.