Recovery is in the air, say UBS' Nokia ( NOK) analysts.

There's talk of a springtime of sorts in Finland. All the gloomy forces that caused UBS to lower Nokia to a neutral rating a year ago have now reversed. UBS analysts Maynard Um and Gareth Jenkins raised Nokia to a buy Thursday on signs of a rebirth.

The report gives six reasons to buy Nokia stock:
  • New, more compelling phones
  • Some signs of life in a previously dormant phone market
  • Margins are holding ground
  • A new stock buyback plan is being mulled
  • Solid management
  • Rival Sony (SNE) Ericsson (ERIC) is on the ropes
  • In summary, the UBS team says Nokia was not attractive a year ago as it faced a weakening economy carrying a "tired" product lineup. "It is a reversal in these two main negatives that stimulates our upgrade," the analysts wrote in their research note.

    The bullish note comes about two weeks after a Gartner report showed that Nokia suffered a stunning 17% drop in its December smartphone market share, falling to 40.8% from 50.9% at the end of 2007. Apple ( AAPL), Research In Motion ( RIMM), and Samsung successfully robbed business from Nokia with popular phones in this key market segment.

    Nokia is likely to claw back some of that business as it finally embraces the popular touchscreen trend.

    The problem, however, is that every smartphone player has a new crop of phones coming to the same market this year. Motorola ( MOT) is expected to deliver Google ( GOOG) Android phones. Palm ( PALM) will eventually launch its potential salvation phone called the Pre. And Apple is expected to roll out the third version of its iPhone this summer.

    So, Nokia might not be getting worse, but the rest of the field is certainly getting better.