Jsyke Bank calls Nokia sell-off “over-reaction”


Nokia’s shares suffered a major sell-off on on the 5th, seemingly in response to their announcement of the Nokia Lumia 820 and 920 Windows Phone 8 handsets.

Various explanations have been put forth, with the one most often quoted being that Nokia did not provide clarity regarding shipping dates and carrier support.

Of course Nokia and Microsoft have never been in the habit of making announcements for carriers, especially when there are so many in Europe and USA that are involved.

Jyske Markets called the sell-off, which they blamed on speculation and which robbed the company of 15% of its value in one day, as an over-reaction.

"The lack of major surprises at (this week’s) press conference and probably the closure of speculative positions made the Nokia share decline by no less than 15%. Seen in isolation, we consider this an overreaction. We believe that the telephones will strengthen Nokia’s competitiveness in the battle for smartphone customers," says a note from the Jyske Markets research desk.

They noted that the new handsets would bring Nokia up to par with their competitors.

"Our immediate assessment is that this telephone will close Nokia’s overhang in terms of functionality relative to e.g. Apple’s and Samsung’s flagships. For instance, Lumia 920 has a camera technology (PureView) and screen resolution (+HD) that are at least in line with best practice. In addition Nokia offers wireless charging, the best navigation suite in the market, and of course Microsoft’s newest Windows Phone 8 operating system. However, Lumia 920 ’only’ has one dual core processor, which may be a disappointment to some people. Nokia guarantees, however, that the telephone will run smoothly."

In the absence of confirmation from Nokia shipment dates ranging from mid-October to Early November have been floated, and distribution by carriers such as AT&T and Verizon have all been mooted, and by retailers like Phones4U on UK confirmed. We believe It is very likely Nokia worked closely with carriers in creating these two handsets, and distribution should not be a real concern.

It would be interesting to see how the market responds to new information as it trickles in.

Nokia shares recovered close to 13% from its 5th September low, and at close of market traded at $2.65.  Jyske recommends the shares for a Buy and maintains a 12 month target of $3.58 for the shares, which may be considered conservative if Nokia does show real signs of traction with Windows Phone 8.

See Jyske Bank’s full research note here.

Via Economy-news.co.uk