Schaeffer's and Wall St. Cheat Sheet on NOK after the Siemens announcement...
schaeffersresearch.com
Up more than 80% on a year-over-year basis to trade at $3.86, NOK received some bullish attention today, after the company said it will acquire Siemens AG's (ADR) (NYSE:SI) 50% stake of their joint venture, Nokia Siemens Networks. UBS raised its price target to 3 euros from 2.4 euros, while BofA-Merrill Lynch and Nomura issued their own upward price-target adjustments. (However, Canaccord Genuity lowered its price target.) Elsewhere, bearish speculation continues to grow toward Nokia Corporation (ADR), as short interest climbed by more than 11% during the past two reporting periods. These pessimistic bets now account for nearly 12 days' worth of pent-up buying demand, at the equity's average pace of trading. - Schaeffer's Investment Research -
>> Will An Acquisition Help Nokia?
Victor Mora
Wall St. Cheat Sheet
July 02, 2013
wallstcheatsheet.com
With shares of Nokia (NYSE:NOK) trading around $3, is NOK an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
T = Trends for a Stock’s Movement
Nokia operates as a mobile communications company worldwide. It designs and develops mobile products and services; provides digital map information and related location-based content and services for mobile navigation devices, automotive navigation systems, Internet-based mapping applications; and provides mobile and fixed network infrastructure, communications and networks service platforms, as well as professional services and business solutions, to operators and service providers. Nokia operates in three segments: Devices & Services, HERE, and Nokia Siemens Networks.
Nokia has announced it will acquire the remaining stake it doesn’t already own in the Nokia Siemens network. Nokia is buying Siemens’s (NYSE:SI) 50 percent of the network for a lower-than-expected 1.7 billion euros. Shares in both companies rose after the announcement. The mobile movement is very hot at the moment and if executed correctly, Nokia may be able to see significant profits. Should Nokia provide more relevant mobile products, look for it to become a major player in the space once again.
T = Technicals on the Stock Chart are Mixed
Nokia stock seen a reasonable amount of selling pressure in recent years. The stock is now rebounding higher on higher highs and higher lows. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Nokia is trading above its rising key averages which signal neutral to bullish price action in the near-term.
(Source: Thinkorswim)
E = Earnings Are Decreasing Quarter-Over-Quarter
Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Nokia’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Nokia look like and more importantly, how did the markets like these numbers?
P = Average Relative Performance Versus Peers and Sector
How has Nokia stock done relative to its peers, Apple (NASDAQ:AAPL), BlackBerry (NASDAQ:BBRY), Ericsson (NASDAQ:ERIC), and sector?
Conclusion
Nokia provides valuable communications products to consumers and companies worldwide. With the recent acquisition of the remaining stake of the Nokia Siemens Network, the company is poised to continue to grow. The stock has struggled in recent years but is now seeing a powerful rebound. Over the last four quarters, investors in the company have been disappointed as earnings and revenue figures have been mostly decreasing. Relative to its weak peers and sector, Nokia has been an average year-to-date performer. WAIT AND SEE what Nokia does this coming quarter.
© & ® 2013 Wall St. Cheat Sheet ###
- Eric - |
