Analysts: Cogent stock overvaluation charges premature

The stock price of federal biometrics supplier Cogent Inc. is recovering after taking a dip Monday on media speculation that it may have been overvalued.

Analysts said today the company should benefit from Congress' recent funding boost to the Homeland Security Department's U.S. Visitor and Immigrant Status Indicator Technology program, known as U.S. Visit, which uses the company's fingerprint systems.

U.S. Visit collects and stores fingerprints from foreign visitors to the United States. Secretary Michael Chertoff sought additional funding for fiscal 2008 to pay for an upgrade so the system could collect 10 fingerprints, up from the two collected currently.

That funding boost should also help Cogent, said analysts Jeremy Grant and Mehmet Agyuz of Stanford Group Co., an investment research firm.

"Congress not only fully funded this upgrade on Dec. 19 as part of a $462 million FY '08 U.S. Visit budget, but also provided an extra $13 million to speed up deployment of the air/sea exit portion of the system. Both programs should benefit Cogent, who provides the core hardware and software used to match U.S. Visit fingerprints," they wrote.

Cogent's stock fell $1.40 per share in premarket trading on Monday, to $10.23. An article in Barrons quoted an unnamed hedge fund manager estimating Cogent stock's worth at only $4 per share.

The price rose later on Monday, and was trading at $11.04 per share at midday today.