Nokia Oyj (ADR) (NOK): Here’s Why This Top Analyst Maintains a Cautious Stance

Michael Walkley revisits Nokia from the sidelines following LG patent ruling.


On Monday, the International Court of Arbitration of the International Chamber of Commerce has issued its award, settling the royalty payment obligations LG must pay Nokia Oyj (ADR) (NYSE:NOK) for using smartphone patents.

However, Canaccord’s top analyst Michael Walkley remains sidelined on Nokia shares, reiterating a Hold rating and price target of $7.00, which implies an upside of 16% from current levels.

Walkley commented, “Nokia recently received a patent license arbitration award from LG, and we believe Nokia continues to make steady progress in growing its high margin licensing business model. However, we remain cautious on global carrier spending trends and have updated our model for weaker 2H/2017 Network sales combined with currency headwinds given the strengthening Euro versus the dollar.”

“While we anticipate the challenging macro will likely persist through 2018, we believe Nokia management will continue to execute on its margin and cost reduction targets. We believe Nokia management has a strong track record of operational excellence and will continue its strong execution. Further, we believe the technology licensing business can also create a source of high-margin growth longer term, given our belief the recent deals with Apple, Samsung, LG, and Xiaomi should help Nokia reach deals with Chinese OEMs longer term. In fact, with the recent momentum in this division, we believe this could help Nokia improve the pace of closing new agreements with leading Chinese OEMs,” the analyst continued.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, 5-star analyst Michael Walkley has a yearly average return of 18.9% and a 65% success rate. Walkley has a -6.5% average return when recommending NOK, and is ranked #47 out of 4657 analysts.

Out of the 17 analysts polled in the past 12 months, 7 rate Nokia stock a Buy, 9 rate the stock a Hold and 1 recommends Sell. With a return potential of 8.3%, the stock’s consensus target price stands at $6.51.