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Nokia (NOK) PT Lifted at Canaccord Genuity; Sees Several Unappreciated L-T Growth Drivers

May 27, 2014 8:43 AM EDT
Get Alerts NOK Hot Sheet
Price: $3.54 -1.67%

Rating Summary:
    20 Buy, 17 Hold, 6 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 0 | Down: 0 | New: 0
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Canaccord Genuity analyst T. Michael Walkley reiterated a Buy rating and bumped his price target on Nokia (NYSE: NOK) to $11.00 (from $10.50) following meetings with management. Walkley sees several long-term but unappreciated growth drivers.

Walkley commented, "Last week, we hosted investor meetings with President and CEO, Rajeev Suri, in New York and Executive Vice President, and Group Chief Financial Officer, Timo Ihamuotila, in Boston. With our belief the Networks business is positioned for improving trends throughout 2014 combined with the longer-term potential for higher level, high margin licensing revenue and HERE sales growth, we believe Nokia shares represent an attractive long-term investment. Our meetings focused on management’s strategies and the potential growth and shareholder value creation opportunities for the three business units of Technologies, HERE, and Networks."

He added, "We believe Nokia’s 2014 guidance for licensing revenue to reach an annual run rate of €600M post the Microsoft transaction includes conservative assumptions for Samsung and other licensees and has the potential to materially increase longer term with the Samsung arbitration ruling in 2015 and new initiatives to monetize patents longer-term driving high-margin growth opportunities. We also anticipate improving sales trends in Networks and potential for strong long-term higher-margin growth from HERE."

Walkley listed the following investment highlights:

  • Post our meetings, we have increased confidence in Nokia’s potential to grow all three business units and generate strong consolidated margins and free cash flow. We believe the Technologies and HERE divisions have multiple long-term growth drivers that could result in strong consolidated earnings growth from these higher margin businesses.
  • We anticipate improving Networks sales with solid margins at the higher-end of Nokia’s 5-10% long-term guidance throughout 2014. We believe this combined with the improved balance sheet and increased cash return post the Devices sale should support the share price ahead of potential longer-term re-accelerating earnings growth from HERE and Technologies.

For an analyst ratings summary and ratings history on Nokia click here. For more ratings news on Nokia click here.

Shares of Nokia closed at $7.84 yesterday.



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Analyst Comments, Analyst PT Change

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