Morgan Stanley analyst Francois Meunier has high hopes for Nokia Corp (ADR) (NYSE:NOK), upgrading the stock from Equalweight to Overweight. Nokia shares are currently trading at $4.86, up $0.11 or 2.32%.
Meunier wrote, “2017 could be a turning point for the shares as earnings stabilize with revenues in moderate decline and cost cuts finally showing visible results. As a result we believe investors will regain confidence in the earnings forecast after a very weak 2016 and could start focussing on 2018, with the Apple royalties eventually coming back.”
“The shares trade on 8.2x EV/EBIT 2017, which we believe is low compared to the more normalised 10x we would use for valuation in the sector. On top of this, earnings are depressed because of Apple. Assuming Apple comes back in 2018 at a €200m run rate, then the shares would trade on 7.3x EV/EBIT. Assuming the shares trade on a 2018 10x EV/EBIT multiple that would imply a €5.7 share price, and thus 28% upside potential to the current share price,” the analyst added.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Francois Meunier has a yearly average return of 13.1% and a 45.5% success rate. Meunier has a -20.3% average return when recommending NOK, and is ranked #1420 out of 4382 analysts.