Canaccord Genuity analyst Michael Walkley came out today with a research report on Nokia Corporation (ADR) (NYSE:NOK), reducing the price target to $11.00 (from $12.00), while maintaining a Buy rating on the stock. The decreased price target comes in response to the news that the company is acquiring Alcatel-Lucent for €15.6 billion in an all-share deal.
Walkley observed, “While we believe the combination has many strategic long-term merits, we believe Nokia shares represent greater execution risks and anticipate the shares could remain more range-bound near term as investors focus on the milestones associated with closing the deal. For the current Nokia businesses, we maintain our belief the Networks business is well positioned to maintain strong margins and drive solid cash flows combined with the longer-term potential for materially larger and higher-margin licensing revenue. In fact, we believe Alcatel-Lucent will bolster Nokia’s licensing portfolio.”
Bottom line: “We believe the combination of Nokia and Alcatel-Lucent creates a top one or two supplier of LTE wireless infrastructure, fixed broadband, cloud/core, services, and IP routing solutions. It also positions the combined company as the leading LTE RAN supplier with roughly 30% market share and provides Nokia with stronger market share in the higher-margin North America market.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Michael Walkley has a total average return of 24.9% and a 71.1% success rate. Walkley has a 2.8% average return when recommending NOK, and is ranked #6 out of 3574 analysts.