Needham upgrades Cogent (COGT

) to buy from hold.

Analyst Joseph Craigen says his outlook positive with the company signing a number of new, follow-on deals in the second quarter. He says first-quarter earnings per share and revenue beat his estimates.

He says the upward trend of fundamentals has been mirrored by an inverse trend in the stock with Cogent down 30% year-to-date. He thinks this weakness came from rich valuation, overhang from recent lock-up expiration, and headwinds from general downturn in coverage universe.

Craigen says now at a cash-adjusted p-e of 38 times his 61 cents 2005 earnings per share estimate (revised upward from 55 cents), and its valuation appears much more reasonable. He raises his 75 cents 2006 earnings per share estimate to 83 cents. He has a $30 target.