Tuesday, November 27, 2012

RBC raises Nokia Corporation (NYSE:NOK)’s price target

RBC has raised the price target of Nokia Corporation (NYSE:NOK) to $4 a share, based on the demand for its new Lumia devices, which it feels is receiving encouraging response and also an improved cash position.

According to RBC - “NSN is providing some sorely needed cash from operations, while asset sales (e.g.,Vertu) are also cushioning the balance sheet”. The demand for new Lumia devices is positive, but most of it “may be the low, subsidized price of $99”.

Nokia's new range of Window’s based Lumia smartphones has been positioned in the `best-value' category by network carriers who have tied up with Nokia to sell the products.

 Lumia 920 is teasingly priced at $99 with a two-year contract at AT&T, and at $450 without commitment. In Europe, the high-end Lumia is priced at €600 ($778) without a contract and €50–100 ($65–130) with commitments

Reports say that the Lumia mobiles have been sold out with network carriers and major retailers such as Amazon and Wal-Mart Stores.

Though the Nokia Lumia 920 is a heavier device compared to other competing products such as HTC 8X and the Apple iPhone 5, still there is a good demand for the Lumias and analysts have estimated that sales of the new Lumias will exceed 6.5 million units.

Nokia's Asha range of entry-level phones are also seeing good traction in emerging markets and these are the products which contribute higher margins to Nokia's bottomline.

According to RBC - “Nokia still needs to improve its net-cash of €0.98/share, but the situation may not be as dire as previously thought”

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