According to a new report from Liberum Capital, Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) stock is a buy because of the momentum behind the firm’s Lumia smart phones, and the incremental increases in quality the company is making to its line of devices. On today’s market, the firm’s shares rose by 3 percent to sit at $3.75 at time of writing. On its home index in Finland, the firm’s stock stood at €2.92 per share.

Nokia Corporation

Nokia Corporation (NOK)’s Lumia Sales

According to the Liberum report, the momentum in initial sales of the Lumia series of Windows Phone 8 smart phones is greater than the momentum behind the original iPhone. Momentum is similar to Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930)’s, and the report analysts, Janardan Menon and Eoin Lambe, believe that the firm’s performance justifies a twelve month price target of €4.50 on its home index.

Consumer satisfaction is one of the key metrics in the smartphone market, and Menon and Lambe believe that it is in favor of Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) right now. Consumer satisfaction scores are higher for Windows iPhone 8 than for any other smartphone platform. A PC magazine survey found satisfaction with the platform was 9/10, compared to 8.6/10 for Apple Inc. (NASDAQ:AAPL) iOS, and 8.2/10 for Google Inc (NASDAQ:GOOG) Android.

Nokia Consumer Satisfaction

The above chart shows the changes in consumer satisfaction in the last twelve months and the last six months. There is clear momentum behind Nokia in terms of consumer satisfaction as the quality of the company’s smartphone line has increased dramatically in the last year. The company’s latest models, the Lumia 928 and the Lumia 925, incrementally improve the quality of the firm’s offerings, and, it is hoped, will continue to drive satisfaction with the firm’s devices.

Though consumer satisfaction is clearly working for Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) the Liberum analysts are realistic, and they know that building market share will take time. Apple Inc. (NASDAQ:AAPL) took ten quarters to cross the 7 million unit threshold, but Nokia Corporation Lumia shipments are expected to pass 7 million in Q2 2013.

Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) is severely undervalued according to this analysis, but it is clear that Nokia is not Apple Inc. (NASDAQ:AAPL) in the early years of the smartphone market. Back then the market was new, and demand for models didn’t have a wide basis. Now there’s huge competition.

Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) may well continue to grow in the months ahead, but it will be difficult. The €4.50 price target might be over reaching, but for any believing in the firm’s future, it’s a good sign.