Nokia Is On Track To Beat, JPMorgan Says

In a report published Tuesday, JPMorgan analyst Sandeep Deshpande stated that

remains a top pick as currency translation will aid EBIT – a fact that may be ignored in consensus estimates. According to Deshpande, the dollar strength does not increase margins but absolute EBIT should increase. The analyst continued that consensus estimates does not reflect currency impacts, implying the company can exceed estimates. "Because of balanced currency exposure Nokia will not benefit significantly from transactional margin gains from the shift of the euro," Deshpande wrote. "However as per the disclosed exposure in multiple currencies, Nokia EBIT should rise 13 percent year over year in 2015 (€1840 million) even without underlying business growth." The analyst continued that the current consensus estimate is looking for €1692 million non-IFRS EBIT for fiscal 2015. If the full translation impact was in fact seen in fiscal 2015, Nokia could exceed consensus estimates by 8.7 percent. Desphande added that it is "difficult" to raise estimates to the full extent of the currency impact due to a certain degree of hedging. However, the analyst stated that currency benefits coupled with underlying growth implies the company is well position for the coming year. Shares are Overweight rated with a $10.80 price target.