Shares Of Cogint Gains 30% On No News: Here’s What Happened
Shares of Cogint (NASDAQ: COGT) gained more than 30 percent on Monday even though the company didn’t have any news report and no notable activity from Wall Street analysts.
Cogint is a technology company that transforms raw data into intelligence in a fast and efficient manner. The company did report its third quarter results on November 2 in which the company lost $0.19 per share on $52.17 million which is mixed to the 11 cent per share loss analysts were expecting on revenue of $50.7 million.
While such a move is unusual, there tends to be an underlying reason to explain the strong gains. One possible explanation for the surge could be attributed to a Seeking Alpha article which the company’s Twitter page re-Tweeted.
The Seeking Alpha post, written by ‘Global Value Research Company’ described the company as being “well positioned” within the rapidly growing market for data and information. Specifically, the researcher believes that the regulated data market stands at more than $8 billion and the consumer data market is north of $50 billion annually.
Global Value Research suggested that Cogint’s Performance Marketing segment is operating at a 30 percent gross margin while its Information Services segment will reach $150 million or more in annualized revenue.
In fact, the enterprise as a whole could generate $325 million in revenue and taking management’s statements at face value, gross profit dollars will exceed $145 million within the next three years which completely overshadows its recently reported gross margins of just $12 million.
Meanwhile, Cogint has no immediate competitors and the company is led by a stellar management team with a proven track record. As such, the company should soon attract teh interest of Wall Street research firms looking to initiate coverage of the unique company in addition to attracting interest from mutual funds and other large investors.
“We continue to believe these shares are sharply undervalued at the current time and price,” the report concluded. “We expect to see progressively improved earnings with each passing quarter. We believe the continued improvement in economic fundamentals and the growing application for the fused data created through the company’s unique technological know-how will accelerate earnings growth at a multiple of revenue growth and subsequently increased share price.”
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