|Nokia: Credit Suisse Upgrades; Bullish On Windows Phones |
Nokia shares are getting a boost Thursday morning from Credit Suisse analyst Kulbinder Garcha, who raised his rating on the mobile phone maker to Outperform from Underperform, with a new target of 6 Euros, up from 4 Euros. The stock closed at 4 Euros yesterday; in dollars that would be a 50% move from yesterday’s close at $5.08 to $7.62.
His basic bet here is that Microsoft‘s Windows Phone, with a big boost from Nokia, is going to be the third major cell phone platform after Apple‘s iOS and Google‘s Android. (Not said, but worth noting: this would not be a good development for Research In Motion.)
“We fundamentally believe that Nokia’s focus on Windows will allow the company to drive a recovery through 2012 in both its top-line and earnings,” he writes. Garcha now sees 2012 EPS of 25 Euro cents a share, up from 24 cents, with 2013 profits of 60 Euro cents a share, up from 40 cents.
“Longer term, we believe that Nokia can command a 13% market share within smartphones driven by Windows Phone platform based on three key factors,” he writes. “First, we see sensible and aggressive pricing from the outset with initial Lumia devices priced between €180 to €300 to carriers. Second, we see decent support for Windows ecosystem as confirmed by our recent survey of carriers. Third, we believe that the quality of Windows platform is quite good, which, combined with Nokia’s brand, distribution, scale and [intellectual property] should enable it to capture smartphone share making it the third ecosystem behind Android and Apple.”
The analyst adds that a survey of 27 key execs at global carriers is “widely supportive” of a Windows Phone/Nokia renaissance. “We found that 85% of carrier respondents believe that there is a need for a third ecosystem, with 77% noting that it will be Windows Phone/Nokia,” he writes. “Our survey also showed that both subsidy and volume share is expected to be markedly higher for Windows Phone over the next 12 months.”
NOK this morning is up 12 cents, or 2.4%, to $5.20.