Nokia Shares Running Higher Following Credit Suisse Upgrade
Shares of Nokia (NYSE: NOK) are rallying on the heels of an earlier upgrade from analysts at Credit Suisse led by Kulbinder Garcha. The firm increased the investment rating on Nokia from Neutral to Outperform and boosted the price target from €4.80 to €6.
The upgrade was partly related to an updated sum-of-the-parts analysis by Garcha and the other Credit Suisse analysts. "dated our SOTP analysis for Nokia, and we now see upside to €6.0 at least. In particular, we believe Nokia's transformative deal with Microsoft allows it to drive significant value creation from its vast patent portfolio, which we believe is applicable to the whole CE industry," according to Garcha.
The analyst sees Nokia's licensing deals worth at least €2.30 per share given the following three factors.
- deals "with a number of key players in the industry over the last few years (Apple, Qualcomm and BlackBerry) serve as a proof point as to the strength of the company's IPR. Additionally, we believe it can grow its annual royalty run-rate of €500mn by a further 40% pursuing licensing agreements with currently unlicensed handset vendors."
- "Second, 90% of Nokia's patents today are unlicensed and we believe its IPR, especially in areas such as chipsets and OS, can be applied not only to the handset market but also to the wider CE market."
- "Third, the strategic importance of Nokia's IPR also makes this an acquisition target potentially for Qualcomm, Intel, Apple, Huawei, Google, Ericsson, Samsung or a consortium of tech companies, driving a higher take-out value."
Garcha sees €1.60 per share related to excess distributable cash.
On the NYSE, shares of Nokia are trading up more than 5 percent to around $6.60.
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|Apr 2015||Bernstein||Upgrades||Market Perform||Outperform|
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