Mobile maker Nokia Oyj (NYSE:NOK) is likely to see upgrades over the next few years as its turnaround gathers pace, according to analysts at JP Morgan.
In a note on Wednesday, the bank upgraded the stock to ‘overweight’ from ‘neutral’ and increased their target price to US$7.80 from US$4.30, saying they believed investors should “position for the upgrade cycle that is likely to continue to play out over the next 12 months”.
“Nokia raised its FY21 guidance yesterday on the back of positive trends in Q2, and we believe this is just the start of the upgrade cycle, driven by upside to mobile network gross margin”, JP Morgan said.
Analysts added that consensus was overstating the number of sales the firm will lose for the 2021 financial year, and instead predicted the loss will likely be between EUR600mln-EUR800mln as opposed to the implied figure of EUR1.03bn.
As a result, the bank raised their 2021/2022 sales estimates for Nokia by 2.2% and gross margin estimates slightly, resulting in an upgrade to earnings (EBIT) estimates of 22.3% and 21.3% respectively.
Shares in Nokia were up 0.3% at US$5.88 in pre-market trading in New York.