Now, Wall Street is painting the town red with Cogent's blood. And with good reason: Cogent's last quarter was not a pretty picture. Revenue dropped 36% to $22.7 million while EBIT tanked 50% to $7.2 million. Apparently, Cogent's customers aren't as concerned about catching hackers and terrorists as they used to be. To top it off, Cogent is having some serious issues controlling expenses.
Although currently a financial pariah, a few analysts stuck to their buy ratings. Maybe they're thinking what we're thinking: If COGT's top line/bottom line story continues to worsen, we don't see why a potential acquirer wouldn't be interested in Cogent's 42% net margins and clean balance sheet.
The company holds $340M in cash and no debt, quite a war chest for such a small firm (< $1.5B market cap and just 164 employees). Because of its advanced technology (patented image reconstruction and highly accurate fingerprint matching algorithm), Cogent controls an attractive niche which a larger player might want to look closely at. We're still getting to know this stock, but let's just hope Cogent's next quarter isn't as depressing as this last one.
COGT 1-yr chart: