IndeRes upgrades Nokia stock rating on strong Q3 results

Investing.com reports that IndeRes has upgraded Nokia's stock from a Sell to a Reduce rating, raising its price target to EUR7.00 per share. This upgraded outlook follows Nokia's impressive Q3 earnings, which exceeded both IndeRes's expectations and those of the market. Nokia delivered adjusted EBIT that surpassed forecasts, secured significant orders from AI and cloud customers, and posted revenue of $23.6 billion over the past year, representing a 7.3% growth rate.

The company maintained profitability with earnings of $0.16 per share and has provided guidance for further growth in optical and IP networks next year. IndeRes anticipates a 6-7% increase in earnings estimates over the coming years due to the strengthened order book. Analyst Tommy Saarinen noted that the stock's valuation has returned to a justified level, currently trading at a P/E ratio of 53.4, though InvestingPro analysis suggests Nokia may be slightly undervalued at present.

Despite the positive outlook, the stock has declined by nearly 11% over the past week. Nokia's Q3 results were stronger than expected, with adjusted earnings per share of 0.102, surpassing the forecast of 0.07, and revenue of 5.83 billion, exceeding the anticipated 5.73 billion. The company's sales increased by 9% on a constant-currency basis, and its operating margin expanded to 11.7%, with an operating profit of 605 million.

While Nokia's recent developments, such as its partnership with ICEYE and Ukraine's Ministry of Defence for space technology, have been positive, investors remain concerned about potential cash flow pressure, higher restructuring costs, and working-capital requirements.