Nokia Shares Move Lower In Sympathy With Ericsson's Gloomy Q3 Outlook

After
Telefonaktiebolaget LM EricssonERIC
provided a gloomy outlook for the third quarter, investors found that
Nokia Corp (ADR) NOK
could also face similar issues.

Wells Fargo sees that Nokia might not announce a material miss in the September quarter when it announces its results on October 27. Analyst Maynard Um thinks that the company might have witnessed share gains or better trends in China compared to the situation at the start of the current year.

"We forecast Nokia's Mobile Networks revenue will decline 12 percent y/y in Q3 and decline 7 percent y/y in Q4. We believe the broader pressures in the end markets will continue to limit material upside potential to NOK and think restructuring/synergy details will be important. We maintain our Market Perform rating," the brokerage said in a research note.

Related Link: Telecoms Under Pressure As Ericsson Sees Q3 Results "Significantly Lower" Than Expectations

The firm set a valuation range of $5.30–$6.00 on Nokia shares based on a sum-of-the-parts analysis. Wells Fargo sees risks to shares coming in the form of weaker than expected wireless infrastructure launches, pressure on pricing, merger of Alcatel Lucent SA (ADR) (previously traded ALU) and IP lawsuits.

Wells Fargo comments came on the heels of Ericsson indicating weak trends in the next two or three quarters. The company faced sales pressure in Brazil, Russia, the Middle East and Europe, although there was no material deviation from its plan in North America and China.

At Time Of Writing ...

  • Ericsson was down 20.19 percent at $5.59.
  • Nokia was down 5.11 percent at $5.11.

Full ratings data available on Benzinga Pro.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!
date
ticker
name
Price Target
Upside/Downside
Recommendation
Firm
Posted In: Analyst ColorNewsPrice TargetPreviewsReiterationAnalyst RatingsMoversTechTrading IdeasMaynard UmWells Fargo
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...