UPDATE: Bank of America Upgrades Nokia Corporation to Buy, Raises PT on Risk/Reward Skewed to Upside

In a report published Wednesday, Bank of America analyst Didier Scemama upgraded the rating on

from Neutral to Buy, and raised the price target from $6.19 to $7.07. In the report, Bank of America noted, “We upgrade Nokia to Buy and increase our revenue and EBIT forecasts for 2014/15 by 5/9% and 32/28%, reflecting a more bullish view on the top line for NSN and Advanced Technologies. The risk profile of new Nokia is very different to the handset-focussed Nokia of old, and we see limited potential downside in our bear case to €4, whilst in our bull case we see c60% potential upside to €6.68. We estimate that new Nokia is capable of >€0.35 in earnings power. Our €5.33 [US$7.07] PO is based on an 11x earnings multiple (15% discount to Ericsson's 5yr average, 20% discount to current), to which we add back the excess net cash that we believe could be returned to shareholders (€1.53/share). Our new PO would value Nokia on 0.88x EV/Sales (2015), which we believe is conservative given the 11.8% operating margins we forecast for 2015, vs the current 0.58x EV/sales.” Nokia Corporation closed on Tuesday at $5.66.