Analyst Believes the Stars are in Alignment for Nokia (NOK) Stock

Canaccord analyst Michael Walkley sees the potential for Nokia (NOK) as the list of carriers banning or deciding not to use Chinese original equipment manufacturers (OEM) is growing. That paired with the analyst’s view that Nokia’s management is dependable and creating quality 5G technology only helps this bull’s case. It seems that the situation is just right for Nokia to rise. Walkley reiterates a Buy rating on NOK stock along with a price target of $7. (To watch Walkley’s track record, click here)

The analyst suggests Nokia’s 30% increase in orders since the beginning of the year supports strong fourth quarter revenue growth in addition to improving year-over-year trends in the first half of 2019. Due to an expected roll-out of 5G and a strong end-to-end product portfolio, the company has expressed it will outperform their initial market forecast, as the company continues to capture market share.

“We believe Nokia management will continue to execute on its margin and cost-reduction targets with much stronger margins in 2020 when global 5G builds drive better top-line trends. We believe Nokia management has a strong track record of operational excellence and believe it will continue its strong execution to consolidate market share with the transition to 5G. Further, we believe the technology licensing business can also create a source of high-margin growth, given our belief the deals with Apple, Samsung, Huawei, Oppo, and Xiaomi should help Nokia reach new deals with Chinese OEMs longer term. […] Further, with Huawei banned from certain markets, we view Nokia as the only global supplier with an end-to-end solution, as evidenced by leading global carriers choosing Nokia as a partner for 5G deployments,” the analyst explains.

The list goes on. French telecommunications company Orange has announced it will not continue to work with Huawei and will stay loyal to Ericsson and Nokia when it comes to 5G technology. Similarly, German company Deutsche Telekom is also continuing to work with Nokia, among other distributors. The analyst believes these developments will help Nokia gain market share as more leading global carriers choose Nokia as their partner for 5G deployments. What’s more is Walkley asserts Nokia management is still on track to grow its technology licensing business by 10% CAGR through 2020 excluding some catch-up payments.

The Street is bullish as well, and consensus shows this stock is considered a Strong Buy, according to TipRanks analytics. Out of four analysts who have reviewed the stock in the last three months, three are bullish and one sidelined. The consensus price target of $6.50 has a potential upside of around 10%. (See NOK’s price targets and analyst ratings on TipRanks)

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