Cogent sells transit to services like Netflix, which lets Internet traffic pass between networks. Netflix's peering deal with Comcast potentially cuts out Cogent by connecting Comcast subscribers directly to Netflix.
Netflix is an important customer for Cogent, though Wells Fargo released a note Monday saying the streaming service accounts for less than 2% of Cogent's revenue.
A separate note from Citigroup says Netflix accounts for 1.7% of Cogent's revenue, and notes that Comcast's rate is likely above the rate Cogent charges Netflix.
TheStreet Ratings team rates COGENT COMMUNICATIONS GRP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate COGENT COMMUNICATIONS GRP (CCOI) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, expanding profit margins, compelling growth in net income and solid stock price performance. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."