Top Analyst Cautious on Nokia Corp (ADR) in Short-Term


After hosting an investor meeting with CFO Kristian Pullola at Mobile World Congress, the largest global gathering for the mobile industry, top analyst Michael Walkley at Canaccord remains sidelined on Nokia Corp (ADR) (NYSE:NOK) due to a tough micro atmosphere in light of the industry’s sluggish preparation for 5G. In reaction, the analyst reiterates a Hold rating on NOK with a price target of $5, which represents a 5% downside from where the shares last closed.

However, though there are challenges Nokia must face, the analyst also believes the giant is “positioned to lead [the] industry transition to 5G.” Yet, these advantages are not in the near-term with 5TG “still years from commercial ramps,” leaving the analyst playing on the cautious side for now.

“While we believe Nokia is well-positioned for strong market share gains as the wireless industry transitions to 5G technologies, we do not anticipate meaningful 5G carrier investments until 2019. Despite the challenging macro, we are encouraged Nokia management has executed on its cost reduction targets and enters 2017 with a more stable market backdrop. Following our meetings, we continue to believe Nokia management will maintain strong execution on reducing costs to achieve operating margin targets of 8%-10% in Networks consistent with its analyst day and guidance. We believe Nokia management has a strong track record of operational excellence and will continue its strong execution on cost-cutting initiatives following the Alcatel Lucent acquisition. Further, we believe the technology licensing business can also create a source of high-margin growth longer term (although the Apple renegotiation could take more than a year to resolve),” Walkley surmises.

Michael Walkley has a very good TipRanks score with a 66% success rate and a high ranking of #26 out of 4,513 analysts. Walkley earns 19.5% in his annual returns. However, when recommending NOK, Walkley faces a loss of 6.5% in average profits on the stock.

The analyst reiterates a Hold rating on NOK with a price target of $5, which represents a 5% downside from where the shares last closed.

TipRanks analytics show NOK as a Buy. Based on 9 analysts polled by TipRanks in the last 3 months, 5 rate a Buy on Nokia stock while 4 maintain a Hold. The 12-month average price target stands at $5.83, marking a 10% upside from where the stock is currently trading.

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