Nokia Corporation (ADR) (NYSE:NOK) (HEL:NOK1V) has received a rare stock price boost, after Wunderlich Securities based in Memphis Tennessee raised their price target from EUR 2.50 to EUR 3.20 per share. The Finnish-based mobile phone maker's stock price declined for the majority of last year, but has started showing signs of recovery. Nokia is gunning on the progress of windows phone mobile platform to catapult its stagnating market share, as the push for a third ecosystem in the mobile platform arena continues. Currently, its seems as though Google Inc (NASDAQ:GOOG)'s Android platform along with Apple Inc. (NASDAQ:AAPL)'s iOS, are unbeatable.
In a report published Thursday, Wunderlich Securities analyst Matthew S. Robison reiterated Nokia Corporation (ADR) (NYSE:NOK) (HEL:NOK1V) stock at Hold, but raised his price target on the ailing giant to EUR 3.20, citing a significant progress on Windows Phone platform. The analyst believes that positive progress in Windows Phone will boost confidence in the company's cash flow prospects. The analyst also pointed to Nokia Siemens Network LTE cycle to boost infrastructure business.
In the report, the analyst wrote, "We expect 4Q12 results to show broadening carrier/industry support for Windows Phone (WP), while other segments demonstrate the stability to support WP market development efforts. We expect progress with WP to increase confidence in future cash flow later this year. Meanwhile, the Global mobile Suppliers Association (GSA), forecasts the number of commercially launched LTE networks to, nearly double this year, with expansion to 75 countries from 51. Since Nokia Siemens Networks (NSN) are an early mover in LTE, we expect this cycle to provide a meaningful tailwind of infrastructure business".
The analyst is bullish on Nokia's smart devices revenue potential, which he believes will also boost the overall revenue. However, unit margins are expected to remain thin. Nonetheless, EPS has been ticked up by EUR 0.01 for the December quarter, following the patent settlement with Research In Motion Limited (NASDAQ:RIMM) (TSE:RIM), which yielded the Finnish company $50 million. The firm held onto its 2013 estimates, expressing that the margin changes are unlikely to results in any significant change to their above-consensus estimate.
Nokia's market share in the feature phones business remains strong when compared to the hammer blow rivalry exhibited in its smart devices business. The analyst believes that the future phones business unit will continue to ramp, but does not expect low cost WP products for several quarters, when the company can move away from expensive Qualcomm Inc. (NASDAQ:QCOM) –NR platforms.
While NSN/LTE remains one of the most significant developments in the industry, the chances of increasing sales volumes in the smart devices segment to the level achieved in the Mobile devices unit is expected to take at least one year. The struggle continues, but not without the benefit of diminishing earnings headline risk in the mobile devices segment. In the report, the analyst noted, "with LTE network deployment among the most significant factors in the industry this year, we believe NSN diminishes earnings headline risk and that WP8/Lumia support for LTE has also been positive for Smart Device sales".
The analyst believes that the volatility in Nokia Corporation (ADR) (NYSE:NOK) (HEL:NOK1V) shares reflects the market view that the shares are an option on corporate survival. However, as the company executes with Windows Phone, especially the potential to bring Windows Phone to emerging markets (as successor to the current Mobile Device line); the analyst expects the market to begin valuing Nokia Corporation (NYSE:NOK) shares on the prospects of future cash flows.
At the time of this writing, Nokia Corporation (ADR) (NYSE:NOK) stock was trading at $4.16 per share, up $0.05, or 1.22 percent increase from the previous close. The shares were trading at EUR 3.20 in Milan.