Nokia (NYSE:NOK) started 2019 strong on the markets and topped over $6.60, only to give up those gains ahead of the earnings report scheduled for this Thursday, April 25. Why is the stock trading at 13 times forward earnings when 5G networking growth is set to soar?
Nokia and ANTEL will both develop a 5G solution on 28 GHz frequency. The firms are clearly at the leading edge of 5G development. Huawei’s troubles at the political level continue to give Nokia and Cisco Systems (NASDAQ:CSCO) a chance to win more contracts. Huawei has technical leads but without any trust in the firm, the Chinese firm may lose against Nokia. Countries will want a firm they can trust and will not want to deal with the risk of backdoor security holes.
Nokia has the expertise to provide an end-to-end solution in 5G. Its latest contract win with ANTEL as a partner in Latin America is another positive development.
Earnings Expectations
Nokia is expected to earn $0.03 a share, similar to last year’s levels. Short-selling dropped to 50 million shares in March and may continue dropping after the earnings report. If Nokia raises its outlook, the $6.87 price target (per tipranks) will prove too low.
Disclosure: Author owns shares of Nokia
