Bank of America: Nokia Top European Pick

is Bank of America's top European pick, according to U.K. based analyst Kai Korschelt. “Our analysis of Nokia's IP portfolio opportunity reveals mid-to high double digit percentage bull-case upside potential to 2016E street earnings per share,” Korschelt wrote. “We expect the company to show superior revenue and earnings momentum versus European peers making it our top pick.” Korschelt sees Nokia's Networks division outperforming its peers in the second half of 2014 due to its lack of exposure to sub-seasonal capital expenditures at

and

Additionally, Nokia will see incremental revenues from

spending and an expected

capital expenditure raise in Europe. In addition to a strong performance from Nokia's Networks division, the company's wireless and mobility patent portfolio remains undermonitised, according to Korschelt. The analyst expects Nokia to settle royalty rates with Samsung in 2015 and with

before 2017. Korschelt estimates Nokia maintains a royalty rate of global mobile device sales of approximately 0.2 percent. If Nokia improves its royalty rate to 1.5 percent, which is less than half of the royalty rate

generates, this could generate an earnings per share of 0.76 euros in 2016, more than double the current consensus estimate. Shares are Buy rated with a 7.60 euro (~$9.65) price target.