Nokia Oyj

NOKIA: XHEL (FIN)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	€1.40	Nqld	Blfjgbp

Nokia Earnings: Trends Are Improving, but Sales Remain Very Weak

Matthew Dolgin

Jul 18, 2024

Nokia's second-quarter revenue was very disappointing, as the rate of decline improved only slightly. Recovering industry trends were much more pronounced in peer Ericsson's second quarter. Although we believe Ericsson has a near-term edge in mobile networks, Nokia has a more diverse business that will also benefit from a recovery in telecom carrier spending. We expect Nokia's other segments to contribute to a significant improvement in financial performance after 2024. Combined with what we believe are smart recent capital allocation decisions with the Infinera acquisition and an accelerated share buyback, we believe shares remain undervalued. We are maintaining our EUR 5.50 fair value estimate.

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