Analyst increase Nokia’s share price target to meet reality

Barrons report that Wunderlich Securities’s Matthew Robison Thursday has increased his target share price for Nokia from €2.50 ($3.30) to €3.20 ($4.22) and reiterated his hold rating on the stock. Nokia’s shares closed yesterday at $4.16.

The move represents a return of sorts of some confidence in the survival of the company, with Robinson saying:

In our opinion the volatility in Nokia shares reflects the market view that the shares are an option on corporate survival. As the company executes with WP, especially the potential to bring WP to emerging markets (as successor to the current Mobile Device line), we expect the market to begin valuing the shares on prospects for future cash flow. We believe our target multiple of 5x 2013E EBITDA can be achieved as this occurs.

He now expects Nokia to have sold 8 million, rather than 6 million smartphones in Q4 2012, mainly due to better-than-expected reception for the “Lumia” line of phones, also noting last quarter saw “broadening carrier/industry support for [Microsoft’s (MSFT )] Windows Phone (WP), while other segments demonstrate the stability to support WP market development efforts.”

He now expects Nokia to make a 4c loss per share, rather than his expectation of 5c earlier.

He was now also more optimistic about Nokia’s Nokia-Siemens Networks cellular equipment business, due to expansion of LTE networks by carriers, saying:

The Global mobile Suppliers Association (GSA) forecasts the number of commercially launched LTE networks to nearly double this year with expansion to 75 countries from 51. Since Nokia Siemens Networks (NSN) is an early mover in LTE, we expect this cycle to provide a meaningful tailwind of infrastructure business […] We expect the struggle to bring WP volume to levels that deliver gross margins comparable to the Mobile Device segment to take at least another year. With LTE network deployment among the most significant factors in the industry this year, we believe NSN diminishes earnings headline risk and that WP8/Lumia support for LTE has also been positive for Smart Device sales. We believe NSN participation in the large/mature LTE markets is limited to Japan, so comparisons should be relatively easy this year.

Nokia’s share price is up 150% from their 52 week low of $1.63.  The company will be reporting their Q4 2012 financials on the 24th January.

Read more at Barrons here.

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