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Wells Fargo Just Put A Value Range On Nokia If It Buys Alcatel Lucent's Wireless Assets

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In a report published Tuesday, Wells Fargo analysts maintained a Market Perform rating on Nokia Corp (NYSE: NOK), following news of the company's plans to acquire Alcatel-Lucent's (NYSE: ALU) wireless assets.

According to Bloomberg, Nokia is in "advanced talks" to purchase Alcatel Lucent's wireless assets and an announcement could be made as early as this week. There was no indication of the potential purchase price, nor were there any comments from the managements of either of the companies.

Following the news Nokia's shares surged almost 3 percent, versus a 0.5 percent decline in the S&P500.

In the report Wells Fargo noted, "Assuming ALU's wireless business will generate €4.8bn in revenue in 2015 (consensus estimate - with a goal of positive operating profit) and that NOK can get some synergy and drive higher operating profit into the mid-single digits, we estimate this would generate roughly an incremental €0.05 in EPS, all else equal."

"We would view the deal's accretion to earnings, the solidification of its position in the industry, the acquisition of a broader footprint, and the consolidation in the industry as positive though over time we believe there would still be the need for a consolidation by customers to one platform," the analysts wrote.

Nokia's Networks segment continues to generate consistent profitability though "operating margins are likely to fluctuate quarter to quarter," the report said. Following the divestiture of its mobile devices business, the company's IP business has potential for growth, although resolution and visibility could take time.

The valuation range is estimated at $7.20 to $8.00 per share. "While we do not believe the HERE business is strategic to Nokia, its financials are immaterial to have an overall impact," the analysts added.

Latest Ratings for NOK

Jan 2018Goldman SachsDowngradesBuyNeutral
Oct 2017ArgusDowngradesBuyHold
Oct 2017Canaccord GenuityMaintainsHold

View More Analyst Ratings for NOK
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Posted-In: Wells FargoAnalyst Color Reiteration Analyst Ratings


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