,Inc. (AMZN) and Nokia Corp (ADR) (NOK) Attract Analysts Following New Video Platform and Earnings

Analysts provide updates on internet retail giant,Inc. (NASDAQ:AMZN) and telecommunications service provider Nokia Corp (ADR) (NYSE:NOK) following the announcement of a new video platform that could threaten YouTube and a poor Q1 performance highlighted by a slowdown in mobile network revenue, respectively., Inc.

Following an update to Amazon’s video platform, Cantor Fitzgerald analyst Youssef Squali reiterates a Buy rating on shares of Amazon and maintains a target price of $800.

Amazon directly challenges YouTube with its new video platform Video Direct. This release comes shortly after Amazon released its $8.99 standalone video subscription service, making Amazon a player across the entire video segment including ad-supported, subscription, and one-time purchase/rental video. The video direct services offers flexibility to customers as they can distribute their content on Prime Video at no extra charge for Prime members as an ad-on subscription through the Streaming Partners Program, as a one time rental or one time purchase, or for the first time, make content available to all Amazon customers in an ad-supported environment.

Amazon’s ad-supported service looks to threaten Alphabet’s YouTube. According to Squali, Amazon claimed that it will keep 45% of the revenue generated from ads during free broadcasts, which matches YouTube’s arrangement. Further, Squali explains that Amazon is expected to keep 50% of revenue from channel subscriptions and video purchase/rentals and pay 15 cents per hour streamed to content creators for ad-free prime videos.

Amazon’s Video Direct program also offers a share of $1M/month to video creators based on customer engagement with the content, based on the top 100 AVD titles in Prime Video in addition to other revenue earned.

According to TipRanks which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Youssef Squali has a yearly average return of 14.6% and a 65% success rate. Squali is ranked #8 out of 3926 analysts.

Out of the 30 analysts polled by TipRanks (in the past 3 months), 27 analysts rate stock a Buy and 3 rate the stock a Hold. The stock’s consensus target price is $803, marking a potential upside of 14%.

Nokia Corp (ADR)

Following disappointing earnings, Canaccord analyst Michael Walkley reiterated a Hold rating on shares of Nokia, and lowered his target price from $6.50 to $5.50.

Nokia reported Q1/16 revenue slightly below consensus as there was, according to Walkley, “a greater than expected seasonal slowdown in mobile networks revenue in North America, Europe, and China.” Consolidated gross margin of 38.3% was in line with consensus despite weaker than expected revenue. This occurred due to a greater mix of higher margin software in networks and lower 3rd party sales of routers as Nokia continues to push their own platform.

Q1 broadband results were below expectations with weaknesses show in North America, driven by a pause in investment activity as some carriers work through transition plans for the combined Nokia and Alcatel-Lucent product portfolio. Walkley believes cost synergies will remain a primary driver of earnings growth as Nokia faces a challenging macro backdrop possible for the next several years, particularly in the wireless infrastructure market after years of strong global LTE investments. Nokia is targeting €900 million in synergies by 2018. The company is examining opportunities in supplier relationships with over 240 programs targeted for procurement cost reductions including 40 already completed.

Walkley sees carrier network coverage spending trends remain a challenge for Nokia as trends will “remain soft y/y during 2016 and transition to more of a capacity spending mix with upcoming carrier aggregation implementations in China.” Further, Walkley believes that annual 4G infrastructure spending has likely peaked and anticipates China and overall global LTE spending to decline during 2016.

According to TipRanks which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Michael Walkley has a yearly average gain of 13.8% and a 56% success rate. Walkley is ranked #29 out of 3926 analysts.

Out of the 13 analysts polled by TipRanks (in the past 3 months), 7 analysts all Bullish on Nokia Corp (ADR) stock and 6 are neutral on the stock. The stock’s consensus target price is $7.36, marking a potential upside of 39%.


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