Morgan Stanley Upgrades Nokia (NOK) to Overweight
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Morgan Stanley upgraded Nokia (NYSE: NOK) from Equalweight to Overweight.
Analyst Francois Meunier comments "2017 could be a turning point for the shares as earnings stabilize with revenues in moderate decline and cost cuts finally showing visible results. As a result we believe investors will regain confidence in the earnings forecast after a very weak 2016 and could start focussing [sic] on 2018, with the Apple royalties eventually coming back. The shares trade on 8.2x EV/EBIT 2017, which we believe is low compared to the more normalised 10x we would use for valuation in the sector. On top of this, earnings are depressed because of Apple. Assuming Apple comes back in 2018 at a €200m run rate, then the shares would trade on 7.3x EV/EBIT. Assuming the shares trade on a 2018 10x EV/EBIT multiple that would imply a €5.7 share price, and thus 28% upside potential to the current share price."
Shares of Nokia closed at $4.75 yesterday.
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