Nokia (NOK) Estimates Cut by BMO Capital

NEW YORK (TheStreet) -- Shares of Nokia (NOK) may reach as low as $6.50, according to BMO Capital.

Shares of Nokia rose 0.4% to $7.06 Friday.

Analysts Tim Long, Alex Spektor, and Ari Klein cut 2014 EPS estimates for the smartphone producer to 19 euro cents from 35 euro cents, with a 2015 EPS estimate of 23 euro cents a share. The firm's model assumes that Nokia's sale of its handset division to Microsoft (MSFT) closes in Q1 2014.

BMO Capital maintains its "market perform" rating for Nokia.

TheStreet Ratings team rates NOKIA CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate NOKIA CORP (NOK) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Powered by its strong earnings growth of 88.23% and other important driving factors, this stock has surged by 73.74% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Communications Equipment industry. The net income increased by 88.3% when compared to the same quarter one year prior, rising from -$1,276.81 million to -$149.37 million.
  • NOKIA CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, NOKIA CORP reported poor results of -$1.10 versus -$0.41 in the prior year. This year, the market expects an improvement in earnings ($0.05 versus -$1.10).
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Communications Equipment industry and the overall market, NOKIA CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The debt-to-equity ratio of 1.01 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, NOK maintains a poor quick ratio of 0.92, which illustrates the inability to avoid short-term cash problems.

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