Needham downgrades Cogent (COGT ) to hold from buy.
Analyst Joseph Craigen says fourth-quarter revenues beat his estimate by $3 million and earnings per share was a penny above his estimate.
He sees good things ahead for the company with its backlog and high probability backlog will translate into revenues. He notes the company's backlog rose to $127 million from $47 million a year ago. Also, he says the company cited an increase in radio finger printing activity and an improved pipeline.
However, he is concerned that the stock is anticipating much of its positive outlook and it's currently valued at cash-adjusted p-e of 60 times his 55 cents 2005 earnings per share estimate. Therefore, he downgrades Cogent, although he raises his $152 million 2005 revenue estimate to $157 million.