Goldman Sachs Highlights Key Takeaways on Nokia Corp (ADR) (NOK) Following Roadshow with Management

Goldman Sachs analyst Alexander Duval is out with a bullish forecast on Nokia Corp (ADR) (NYSE:NOK) after hosting a roadshow with management in London, including CEO, Rajeev Suri, Senior VP and Corporate Controller, Kristian Pullola, Head of IR, Matt Shimao and Director of IR, Eero Tuulos, and more.

On the heels of the roadshow, the analyst shares key takeaways and reiterates a Buy rating on shares of NOK with a $5.80 price target, which represents a 22% increase from current levels.

First, Duval notes that the telecom giant maintains its anticipation that the financial year of 2017 will yield dips in the wireless market, adding, “NOK expects the US market to be solid, China to remain weak, and FX uncertainty to prevail in LatAm.”

Second, the analyst underscores, “Key opportunities include Public Safety, where the market will see traction in 2017, Cable, where there is potential to sell equipment beyond routing and access, and webscale, where NOK’s next-gen product will have the high capacity level required.”

Third, Duval points to swap and restructuring costs, explaining, “While swap costs guided to at the CMD were higher than expected, this reflects progress in aligning customer roadmaps.” However, though the giant has indicated restructuring costs will be €0.5 billion above what was initially anticipated, Nokia will bring forth €1.2 billion of net synergies, “even as it invests in adjacencies,” Duval asserts.

Fourth, the analyst believes, “5G is likely to coexist with 4G for a long time, as 5G is designed for IoT, whereas 4G is more focused on smartphone traffic.” The giant has expectations for 4.5G coupled with 5.9G to extend the 4G cycle.

Lastly, “Despite some delays in 4G, there are several regions where capacity bottlenecks can drive investment in 2017, especially given continued rapid data growth,” Duval concludes.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, two-star analyst Alexander Duval is ranked #2,683 out of 4,269 analysts. Duval has a 50% success rate and realizes 0.1% in his annual returns. However, when recommending NOK, Duval loses 10.5% in average profits on the stock.

TipRanks analytics exhibit NOK as a Buy. Out of 8 analysts polled in the last 3 months by TipRanks, 4 are bullish on Nokia stock, 3 remain sidelined, and 1 is bearish on the stock. With a return potential of nearly 14%, the stock’s consensus target price stands at $5.38.

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