Why Nokia Has Multiple Catalysts, Multiple Suitors For HERE Biz

In a report issued Thursday, RBC Capital Markets associates Ameet Prabhu and Spencer Green, and analyst Mark Sue share their impressions on Nokia Corporation (ADR) NOK, following their lunch with CEO Rajeev Suri.

The experts believe the company’s stock carries the highest potential return in their large-cap coverage universe, “considering the numerous catalysts ahead” (especially strong licensing activity and a robust pipeline).

Their meeting with Suri provided them with “an expansive market view, highlighting opportunities for cost synergies post Alcatel Lucent SA (ADR) ALU and firming Network OMs.”

The analysts highlight that there are several parties interested in Nokia’s HERE business -- including location-driven technology companies and car makers. The company has indicated, however, that it still hasn’t completed its strategic review, and is continues to consider the option of keeping its HERE assets. Given the “high level of interest and impending Networks focus at Nokia,” RBC believes a price tag around 3 to 3.5 billion Euros may be reasonable. Moreover, the SAMSUNG ELECT LTD(F) SSNLF arbitration is to be concluded soon.

These are both “positive value-unlocking mechanisms,” they say. Thus, while they maintain a Sector Perform rating, they increase their price target from $7 to $8 (€7).

The firm models earnings of $0.25 per share on revenue of $13.5 billion for 2015, and earnings of $0.30 per share on revenue of $14 billion for 2016.