Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) has received another upgrade, this time from Bernstein Research, after the announcement that it will sell its devices unit to Microsoft. Shares of Nokia have been soaring at the New York Stock Exchange today, climbing 31 percent.

Nokia

Nokia’s deal with Microsoft is “good enough”

Bernstein analysts Pierre Gerragu, Mark L. Moerdler, Jasmeet Chadha, Emily Chan and Viral Gandhi issued a report to investors with their take on the deal between Nokia and Microsoft Corporation (NASDAQ:MSFT). They call it “good enough to justify the current share price.” As a result, they’ve upgraded shares of Nokia to Market Perform.

Under the deal announced by Microsoft and Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V), Microsoft buys almost all of Nokia’s Devices and Services division for €3.7 billion. The software giant will also license Nokia’s patent portfolio for 10 years for €1.65 bilion and have an option to extend that in perpetuity.

Bernstein surprised that Microsoft would dare

The analysts said the deal between Nokia and Microsoft was a big surprise to them. The short these they had previously was based on “the assumption that nobody would dare buy out a business of that size (56,000 employees) and in such a difficult position.”

They believed that Microsoft Corporation (NASDAQ:MSFT) had already gotten all of the support it could hope for from Nokia. However, they said Microsoft’s board and management team didn’t seem to share their perspective, so the company is attempting to acquire Nokia’s devices division. They believe that Microsoft has placed “a lot of value on obtaining the full control of Nokia’s operations,” which could be important for the company because of recent indications that it is turning more attention on devices.

Nokia wins big on the deal

The analysts say that from the way the deal is structured, Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) stands to benefit greatly. It gets out of the devices and services business, which would have continued to weigh on its cash flow and probably cost more in restructuring. The company is left with a profitable patent portfolio and its valuable HERE maps.

The company also keeps what Bernstein analysts call its “new crown’s jewel”: Nokia Siemens Networks. In addition, it will have €7.8 billion in net cash left on its balance sheet.

The analysts believe Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s equity value becomes between €3 and €4.8 per share and estimate that the new company will be able to generate earnings of 29 cents per share in 2015.