UPDATE: New Street Research Upgrades Nokia (NOK) to Buy; Sees 54% Upside
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(Updated - January 7, 2020 6:46 AM EST)
New Street Research analyst Pierre Ferragu upgraded Nokia (NYSE: NOK) from Neutral to Buy with a EUR5.30 price target (54% upside).
The analyst highlighted:
- Nokia has missed the 5G turn: radio portfolio issues, margin pressure, market share losses, stock down 50% vs. Ericsson
- Performance of the last 4 years has been dreadful: ~€2.5bn net cash burnt on the Alcatel-Lucent integration and failed 5G transition
- “Safe” FCF of €2bn p.a. provides a good margin of safety
- Deep value opportunity? The stock implies negative value for Wireless. Turned around, it could be worth €16bn; that is ~100% upside
- Multiple ingredients for a successful turn around: Issues acknowledged, 5G will drive growth in 2021 and beyond, operators are supportive
- Change in management would be positive catalyst but maybe not a necessity
Shares of Nokia closed at $3.93 yesterday.
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