Nokia (Hold, TP: EUR3.30) - H2e execution story
Despite an 18% underlying adj. EBIT miss, a Q1 highlight was gross-margin resilience, which in our view indicates medium-term earnings potential. For the stock to re-rate, however, we believe focus needs to move from an SOTP discussion to: 1) earnings momentum, as Nokia executes on its H2-tilted outlook; 2) balance-sheet optionality allowing larger buybacks; and/or 3) the possibility of a break-up. With our 2024–2025e broadly unchanged, we are not willing to take such a stance yet, and still see value support for the stock as we note the patent portfolio could represent ~80% of Nokia’s EV, valuing the stub at 3.3x 2024e EV/EBIT. We reiterate our HOLD, with a lowered EUR3.3 (3.6) target price.Nokia is an Internet and communications technology company based in Finland. Co.'s operations are focused on three businesses: network infrastructure software, hardware and services, which Co. offers through Networks; location intelligence, which Co. provides through HERE; and advanced technology development and licensing, which Co. pursues through Technologies. Co. maintains a global presence with operations and Researh & Development facilities located in Europe, North America and Asia, and sales in approximately 130 countries. Co. has an installed base of around 600 customers worldwide and these operators serve over 4 billion subscribers.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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