Tech Stock News And Analysis

Tech Stock News and Analysis

Thursday, August 03, 2006

Cogent Plummets on 2Q Earnings Miss, but Analysts Give Mixed Reviews on Company's Future

-- Shares in Cogent Inc., a maker of fingerprint identification systems for law enforcement agencies, plummeted Thursday to a new 52-week low after the company's earnings declined, badly missing Wall Street expectations.

Cogent recently traded down $2.36, or 17 percent, to $11.34 on the Nasdaq. Earlier in the session, the stock bottomed at $10.11, sharply lower than its previous 52-week nadir of $13. A year ago, the stock listed at $33.

Cogent blamed the earnings decline -- 75 percent to $3.6 million, or 4 cents per share -- on expected revenue that was delayed until the second half of the year. That sent sales down by two-thirds to $13.2 million. On an adjusted basis, the company earned 5 cents per share. Analysts were looking for earnings of 10 cents per share, marking the second quarter in a row Cogent disappointed the Street.

Needham analyst Richard Davis downgraded the stock to "Underperform" from "Hold," citing concerns about future revenue.

"The combination of two consecutive shortfalls, our reduced visibility, and the potential for future negative earnings revisions is our reasoning," the analyst wrote.

But other analysts remain bullish on the stock, citing valuation and the potential for future demand.

Jefferies & Co. analyst Matthew McKay upgraded Cogent to "Buy" from "Underperform" despite the miss. "We learned the company has won over $10 million of additional smaller contracts, of which some can likely be recognized as revenue in 2006," he wrote in a note to investors Thursday. "While the perceived risk is quite high at the moment, we believe buying COGT... is an excellent value."

PacificCrest said the company's overdependence on a few key contracts "was severely exposed during Q2." Analyst Rob Owens lowered his price targets for the company, but reiterated his "Outperform" rating, saying, "While it is evident that the massive pipeline is not translating into near-term revenue, we continue to believe Cogent is in front of a massive inflection in demand."

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