Why Nokia Broke Out Above $5.00

When Nokia (NYSE:NOK) posted quarterly results on April 29, the stock immediately responded by rallying. Nokia shares took another week to break out to above $5, closing last week at $5.10.

The breakout looks real this time.

For the last few quarters, Nokia posted unexpected strength that sent the stock higher. Shares would dip on profit-taking next. In the last year, quarterly results worsened. Pessimism peaked when the company suspended its dividend.

Nokia’s Q1 result offers hope. The 5G supplier posted revenue growing by 3.5% Y/Y to EUR 5.08 billion. Gross margin (adjusted) of 38.2% easily beat the 37.1% estimate. For 2023, the firm forecast net sales exceeding the market. Nokia’s expectations for market share growth are a turning point to the upside. It is competing effectively against Ericsson (NASDAQ:ERIC) while taking Huawei’s business. As the Western countries shun Huawei 5G hardware, Nokia will win more business. The U.K. and Europe are also choosing to avoid Huawei hardware, giving Nokia the chance to grow.

Nokia’s odds of disappointing investors next quarter are lower than ever. Expect the stock to hold the $4.70 - $5.00 range at a minimum. Investors who missed the rally may still buy the stock at current levels and expect the upside to outweigh the near-term risks.