Nokia Oyj (ADR) (NYSE:NOK) shares are rising nearly 6% in Tuesday’s trading session following the news that Nokia and Apple settled all litigation related to their intellectual property rights (IPR) dispute. Nokia will receive an up-front payment, including catch-up, with further revenue recognized over the course of the agreement. Also, the deal sets up for future sales of network equipment to Apple and the resumption of a retail relationship for Nokia’s digital health offering.
“This is a meaningful agreement between Nokia and Apple,” said Maria Varsellona, Chief Legal Officer at Nokia, responsible for Nokia’s patent licensing business. “It moves our relationship with Apple from being adversaries in court to business partners working for the benefit of our customers.”
“This agreement will strengthen our collaboration,” said Basil Alwan, President of Nokia’s IP/Optical Networks business. “We look forward to supporting Apple.
Apple’s chief operating officer Jeff Williams added, “We are pleased with this resolution of our dispute and we look forward to expanding our business relationship with Nokia.”
BMO Capital analyst Tim Long commented, “We view the agreement as positive for both companies, given multiple angles of upside to Nokia and better defense against Qualcomm for Apple. Nokia still has an up-hill battle in licensing Chinese vendors, which are a significant and fast-growing portion of the market.”
Long reiterates a Market Perform rating on Nokia shares, with a price target of $6.00, which implies a downside of 9% from current levels.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Tim Long has a yearly average return of 12.8% and a 63% success rate. Long has a -38.1% average return when recommending NOK, and is ranked #243 out of 4554 analysts.
Out of the 17 analysts polled in the past 12 months, 9 rate NOK stock a Buy, 7 rate the stock a Hold and 1 recommends to Sell. With a downside potential of 5%, the stock’s consensus target price stands at $6.26.