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On Thursday, JPMorgan analyst Sandeep Deshpande adjusted the price target for Nokia (HE:NOKIA) stock (NYSE: NOK) to $6.30, a slight decrease from the previous $6.35, while reaffirming an Overweight rating on the company. The stock, currently trading at $4.95, has shown remarkable strength with a 45.13% return over the past year and is trading near its 52-week high of $5.06. According to InvestingPro analysis, Nokia maintains a GOOD financial health score, suggesting strong fundamental positioning. Deshpande’s remarks followed a review of Nokia’s fourth-quarter performance and the forecast for fiscal year 2025. The analyst noted improvements in the Mobile Networks business, anticipating stability in FY25 as losses in AT&T’s share are expected to be balanced by gains with other clients. The Network Infrastructure segment is projected to experience significant year-over-year growth, with a marginal increase anticipated for the Cloud Network Services business.
The revision of revenue estimates for the first quarter and fiscal years 2025 and 2026 reflects an upward adjustment of 0.5%, 1.5%, and 1%, respectively. The majority of this positive adjustment is attributed to the Network Infrastructure segment, which is expected to grow by 2.6% and 1.5% in FY25 and FY26 estimates. Despite maintaining the first-quarter gross margin estimate, Deshpande predicts a slight reduction of 28 basis points in the FY25 gross margin, primarily due to a lower margin in the Network Infrastructure business.
Nokia has provided guidance for an operating profit between €1.9 billion and €2.4 billion for FY25, with a midpoint estimate of €2.15 billion. InvestingPro data reveals that Nokia currently trades at a P/E ratio of 20.49, with analysts forecasting EPS of $0.34 for FY2025. For investors seeking deeper insights, InvestingPro offers 12 additional key tips and a comprehensive Pro Research Report, available among 1,400+ top stocks analyzed on the platform. However, the JPMorgan analysis indicates that earnings before interest and taxes (EBIT) for the first quarter, FY25, and FY26 will be 14.3%, 10.9%, and 3.9% lower than previously estimated. This revision is largely due to increased investment in the Network Infrastructure business aimed at driving mid-term growth and EBIT forecasts that were significantly higher than prior consensus expectations.
As a result of these changes, the estimated earnings per share (EPS) for the first quarter, FY25, and FY26 have been reduced by 3.4%, 4%, and 2.9%, respectively. The updated model by JPMorgan reflects the latest financial results and strategic outlook provided by Nokia, taking into account the company’s efforts to balance its portfolio and invest in growth areas. Based on InvestingPro’s Fair Value analysis, Nokia appears slightly undervalued at current levels, with expected revenue growth of 2% in FY2025.
In other recent news, Nokia’s financial performance has garnered attention following the company’s fourth-quarter 2024 earnings report, which exceeded market expectations in both revenue and earnings. Despite this, Nokia’s projected operating income range of €1.9 billion to €2.4 billion was slightly below the consensus estimate of €2.3 billion. In response, Raymond (NSE:RYMD) James raised Nokia’s stock price target to $5.50 from $5.00, maintaining an Outperform rating. Meanwhile, Nokia’s $2.3 billion acquisition of Infinera (NASDAQ:INFN) is expected to receive EU regulatory approval without conditions, bolstering Nokia’s position in the optical networking market. Additionally, Nokia has secured an injunction against Amazon (NASDAQ:AMZN) in Germany over a streaming patent infringement, compelling Amazon to halt its streaming service operations in the country once Nokia provides the required deposit.
In another development, Nokia has expanded its partnership with AT&T through a multi-year agreement to enhance network services using Nokia’s 5G IMS Voice Core and Digital Operations software. This collaboration aims to improve automation and operational efficiencies for AT&T. Furthermore, Nokia announced a change in leadership with CEO Pekka Lundmark stepping down, and Justin Hotard set to assume the role, a transition that has been positively received by the market. The company continues to focus on strategic investments, including a €100 million investment in IP Networks, to strengthen its market position and achieve long-term growth targets.
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