Throughout the last year, Nokia (NOK) tried, but failed, to break out above $5.00. This bearish resistance foreshadowed the stock’s plunge to the low $4.00 zone.
Nokia has an A- on valuation (per seeking alpha) and a B on growth and profits. Markets did not like the outlook issued in the Q1 report. As a value trap, Nokia investors should not expect any upside for at least a year.
Nokia warned that the weak economic environment is having an impact on customer spending. Although 5G and fiber are necessary, the timing of those deals is unknown. The telecom may reduce its costs as the uncertainty unfolds.
In the pharmaceutical sector, Teva (TEVA) is a poster child of a value trap. It found support at $8.00 in the last year. This limited the drop after the firm received an unfavorable complete response letter (or CRL) from the FDA.
The FDA wrote in the CRL that it could not approve Teva’s application for the biologic AVT02. This is a high-concentration biosimilar
candidate for Humira (adalimumab). The re-inspection and next steps delay the revenue from AVT02. Impatient investors sold TEVA stock in response.
Teva has a long history of markets reacting negatively to its bad news.
Avoid TEVA stock. Look for healthier drug companies.
