What Happened?
A number of stocks fell in the afternoon session after markets pulled back, reversing early gains, as investor sentiment remained cautious despite a softer-than-expected inflation reading.
Stocks rose in the morning session after an unexpected drop in the Producer Price Index (PPI) for August signaled easing inflation and raised expectations for a potential Federal Reserve interest rate cut. The U.S. Bureau of Labor Statistics reported that the PPI, which measures wholesale prices, edged down 0.1% last month, contrary to analyst expectations for a 0.3% rise. This data gives the Federal Reserve more flexibility to consider lowering interest rates to stimulate the economy.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Terrestrial Telecommunication Services company Cogent (NASDAQ:CCOI) fell 4.6%. Is now the time to buy Cogent? Access our full analysis report here, it’s free.
- Professional Staffing & HR Solutions company Alight (NYSE:ALIT) fell 3.5%. Is now the time to buy Alight? Access our full analysis report here, it’s free.
- Data & Business Process Services company CoStar (NASDAQ:CSGP) fell 3.2%. Is now the time to buy CoStar? Access our full analysis report here, it’s free.
- Industrial & Environmental Services company Vestis (NYSE:VSTS) fell 4.6%. Is now the time to buy Vestis? Access our full analysis report here, it’s free.
- Business Process Outsourcing & Consulting company CBIZ (NYSE:CBZ) fell 2.9%. Is now the time to buy CBIZ? Access our full analysis report here, it’s free.
Zooming In On Cogent (CCOI)
Cogent’s shares are somewhat volatile and have had 14 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 8 days ago when the stock dropped 3.7% on the news that Goldman Sachs initiated coverage on the stock with a Neutral rating.
The investment bank set a price target of $40.00 for the telecommunications company. While initiating coverage can bring new attention to a stock, a "Neutral" rating is not a strong endorsement and suggests the analyst does not see significant upside from the current price in the near term. This comes as the stock has already declined over 44% in the past six months. Goldman Sachs noted that while Cogent is making a strategic pivot toward growth following its acquisition of Sprint's wireline business, some of its long-term opportunities may take longer to materialize than the market currently expects.
Cogent is down 54.2% since the beginning of the year, and at $35.30 per share, it is trading 58.6% below its 52-week high of $85.35 from November 2024. Investors who bought $1,000 worth of Cogent’s shares 5 years ago would now be looking at an investment worth $539.51.
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