JPMorgan upgraded Cogent Communications to Overweight from Neutral, citing a potential 34% upside despite lowering the price target to $22. The upgrade is driven by a favorable revenue mix and progress in selling data centers, which will help reduce debt.
JPMorgan Upgrades Cogent Communications, Sees 34% Upside Potential Amid AI Data Center Demand
Investors should scoop up Cogent Communications as it trades at a discount following a major sell-off earlier this week and shows signs of bolstering its balance sheet, according to JPMorgan. The bank upgraded Cogent Communications to overweight from neutral.
The upgrade comes despite JPMorgan lowering its price target on shares to $22 from $23, which still implies a 34% upside from Monday's close. Analyst Sebastiano Petti cited a favorable mix shift toward On-Net and Waves revenue (+9% year-over-year in the first quarter of 2026) and progress on the sale of its data centers as key drivers for the upgrade.
“Following Monday's pullback, we upgrade Cogent to Overweight (from Neutral), driven by (1) a continued favorable mix shift toward On-Net and Waves revenue (+9% y/y in [the first quarter of 2026] on a combined basis) and (2) further progress on the sale of its data centers, which we believe will enable Cogent to reduce debt (on a gross and net basis) and refinance its 2027 unsecured notes,” Petti said in a note to clients on Tuesday.
Shares of Cogent Communications plunged 29% lower on Monday after the internet service provider posted first-quarter earnings results that fell short of expectations. Adjusted EBITDA came in at $70.2 million versus the $73.9 million expected by analysts polled by FactSet. Revenue was $135.6 million, slightly below the consensus estimate of $136.6 million.
Despite the recent decline, Petti believes the stock now presents an “attractive entry point,” particularly if Cogent can successfully close its expected sale of 10 data centers early this summer.
Cogent CEO Dave Schaeffer stated during the earnings call that proceeds from the data center sale should “substantially more than [the firm’s] $144 million” agreement to offload two data centers that was terminated in the first quarter of 2026. The company plans to use the proceeds to reduce debt.
JPMorgan’s call goes against the broader Street consensus. According to LSEG data, only four of the 12 analysts covering Cogent have a buy or strong buy rating, while seven have a hold rating.
