Canaccord’s top analyst Michael Walkley is out with a research note on shares of Nokia Corp (ADR) (NYSE:NOK), after the mobile equipment maker released solid fourth-quarter results, with EPS of €0.12 beating the analyst’s €0.07 estimate due to strong gross margin and a favorable tax rate. NOK is currently trading at $4.86, up $0.29 or 6.46%.
While the analyst remains encouraged by the strong margins and overall cost execution, management maintained its cautious outlook with the total addressable market expected to decline low-single digits in 2017.
“We believe Nokia is well-positioned for strong market share gains as the wireless industry transitions to 5G technologies, but we do not anticipate meaningful 5G carrier investments until 2019 and do expect an ongoing challenging macro spending environment through 2018. Further, given the recent lawsuit announcements between Apple and Nokia regarding licensing agreements, we have not included Apple licensing revenue in our Technologies division estimates. Despite the challenging macro, we are encouraged Nokia management has executed on its cost reduction targets and enters 2017 with a more stable market backdrop. Further, we believe Nokia management will maintain strong execution on reducing costs to achieve operating margin targets of 8%-10% in Networks and consistent with its analyst day and guidance,” Walkley wrote.
Given the challenging macro, Walkley maintains a Hold rating on Nokia shares with a $5.00 price target, which represents a slight upside potential from current levels.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Michael Walkley has a yearly average return of 15.9% and a 61.3% success rate. Walkley has a -8.0% average return when recommending NOK, and is ranked #34 out of 4373 analysts.
Out of the 19 analysts polled in the past 12 months, 10 rate Nokia stock a Buy, 8 rate the stock a Hold and 1 recommends a Sell. With a return potential of 18.0%, the stock’s consensus target price stands at $5.74.
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