Nokia (Hold, TP: EUR3.90) - Weak Q3e to raise the bar for Q4e
We see Q3 as a clearing event, with our adj. EBIT 11% below post-Q2 Infront consensus, increasing the risk of a 2024 guidance cut, or at least raising the bar for a Q4-tilted hockey-stick earnings rebound. The stock is in value territory, and we acknowledge Nokia’s defensive aspects as we believe: 1) the patent portfolio could represent ~60% of its EV, valuing the stub at 5.0x 2026e EV/EBIT; 2) the earnings momentum story is coming closer; 3) a potential break-up as mentioned in the media would be welcomed by investors; and 4) Nokia’s option to acquire Nokia Shanghai Bell expires in two weeks. We reiterate our HOLD, with a slightly raised EUR3.9 (3.8) 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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