Wednesday, October 17, 2012

Nokia Corporation (NYSE:NOK): Analysts Stick to their Underperform Ratings Ahead of Earnings Day

Analysts are not too optimistic about Nokia Corporation (ADR)(NYSE:NOK)’s performance as shares traded up 1.4% this morning before tomorrow’s third-quarter earnings. Sanford Bernstein’s Pierre Ferragu has rated the stock as “Underperform” stated 40% higher losses are expected in 3rd quarter. Lumia shipments might be around 2 million in spite of predictions of 3 million. Lower-end smartphones from Nokia might do well initially, but does not stand a chance against Android’s low end.

Ferragu further predicts a cash burn of €750 million, although it is tough to call on a quarter. A progressive targeted ramp up of Lumia will lower estimates in the 4th quarter; guidance in last quarter is weak. Overall, 2013, as of now, does not look too bright for Nokia.

Cowen & Co.’s Matthew Hoffman once again rated the Nokia stock as Underperform. He feels there will be tremendous top-line pressure in the Devices & Services (D&S) business and an EPS loss in-line with consensus. The 4th quarter might see a slight increase in Lumia shipments and ASPs, due to the anticipation of the Windows 8 platform. Lumia Windows Phone 8 launches might solve immediate issues faced by D&S section, but it is not enough to resolve structural deficits in the long run.

UBS mentioned that Nokia will not have it easy in the smartphone market and RBC is positive that the company will lose share in the Microsoft network.

Shares of NOK have shown solid pre-earnings rally and rose all the way from $2.56 to $2.94 this week, gain of about 15%. Today, the stock was up 4.26% at $2.92.

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