In less than a week, we’ve heard two major bits of news about Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V). Chinese handset maker Huawei Technology Co Ltd (SHE:002502) expressed interest in acquiring it (although it later denied being in talks), and it was revealed that Microsoft Corporation (NASDAQ:MSFT) was actually in talks to acquire Nokia as recently as this month.

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Why A Buy Rating On Nokia?

All this talk of acquisition may have some investors seeing upside to Nokia’s stock, but analysts at Liberum Capital say there’s more to the story. They believe that all the merger and acquisition talk provides downside protection for Nokia and possibly upside. Huawei Technology Co Ltd (SHE:002502)’s interest in particular pushed shares of Nokia higher.

The analysts also added another name to the list of possible acquirers for Nokia: Lenovo Group Ltd. (PINK:LNVGY) (HKG:0992). However, they have based their buy rating not on the possibility of an acquisition, but on the expectation that the struggling Finnish handset maker will be able to turn things around. They also believe that speculation about Nokia Corporation (NYSE:NOK) being acquired by another company will continue until the company turns around.

Evidence For The Value Of Nokia’s Brand

Analysts Janardan Menon and Eoin Lambe of Liberum Capital issued a report to investors stating their bullish case for Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V). They said the possibility of a big turnaround for Nokia, plus the “extremely low valuation multiples” which the stock is trading at make it “an attractive investment” in their view. Currently it’s trading at an EV / sales of .21 times.

They said there’s anecdotal evidence of a turnaround coming in “regularly.” They noted steady increases in the company’s Lumia handsets and evidence of “healthy demand” in the current quarter. They also cited high customer satisfaction with the Windows Phone operating system and the Lumia devices themselves, as well as the “rapidly rising market share” for Windows Phone and a steady refresh rate from Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V).

Growth In Windows Phone

The analysts looked at the most recent Kantar WorldPanel Survey, which indicated that Windows Phone is the fastest growing operating system for smartphones for the three months ending in April. The operating system’s market share jumped to 5.6 percent this year from 3.8 percent in the same time frame a year ago. They noted that the largest jump was in the U.K., where it doubled from 4 percent last year to 8 percent this year. There were also big jumps in other major countries in the European Union.

As far as consumer satisfaction goes, they pointed to a survey in PC Magazine in March. It showed Windows Phone’s consumer satisfaction level was the highest of all operating systems—even higher than iOS and Android. They also saw other consumer satisfaction surveys over the last six months which have placed satisfaction with Windows Phone 8 at higher levels than Android. Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s phones record the highest percentage increase in consumer satisfaction in a March JD Power Survey.

Projections For Nokia’s Current Quarter

The analysts see anecdotal evidence of healthy demand for several of Nokia’s Lumia devices. Of course it is still difficult to estimate actual volumes. However, they believe Nokai will grow its smartphone units by approximately 30 percent quarter over quarter to 7.5 million in the second quarter of this year. They’re estimating the average selling price to remain fairly stable at around €180, and they believe the company’s new product launches will help it maintain its current momentum.