Cogent Communications (CCOI) is set to have a "soft" Q1 due to slower sales of its wavelength services, but it is expected to see a "strong rebound" in H2 boosted by data center sales, Oppenheimer said in a Wednesday note.

The demand for wavelength services is high, but the growth of new customers is slower than expected, Oppenheimer analysts said. They noted that service deployments are lagging due to the need for improvement in customer processes, such as shortages in optical equipment, power supply, and delays in hardware and data setups.

On the upside, installations for Cogent's customers are gradually accelerating amid robust market demand, the analysts said. Though the company is new to the market, it is gaining trust with its rapid deployment of the services across over 1,000 locations, the analysts noted.

Cogent's stock performance this year relies largely on data center sales and its ability to quickly pay down debt, with $750 million due in June 2027, according to the note.

Oppenheimer's rating on the company's stock is outperform with a price target of $30.

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