Nokia’s shares (NOK: NYE) dipped slightly after it reported a significant decline in revenue during the first quarter of 2024. In spite of reports of challenging market conditions and weak demand, Nokia’s top line dropped nearly 20% year-over-year to €4.67 billion.
Stock Target Advisor’s Analysis on Nokia:
According to Stock Target Advisor, Nokia’s stock is rated as ‘hold’ with a target price of $4.25, projecting a 12-month change of 27.69%. The average analyst target price matches the STAs rating at $4.25, with the average analyst rating as a strong buy. As of now, Nokia’s stock price stands at $3.33, with weekly, monthly, and yearly changes being -0.09%, -0.36%, and -27.92% respectively.
Although the stock is clearly under pressure, there are positive signals such as being underpriced on a book value and free cash flow basis, positive cash flow, high market capitalization, and superior earnings and dividend growth. However, some concerning factors, such as poor capital utilization, overpricing on earnings and cash flow basis, below median dividend and total returns, poor risk-adjusted returns, and return on equity, need to be considered.
Nokia: Overview of Financial Performance
Let’s take a quick glance at Nokia’s financial performance over the trailing 12 months and the last 5 years. The weak demand over the year is reflected in the capital gain of -27.92%, backed by a sector percentile ranking of 33.33%. However, the dividend return stands at a decent 2.83%, with a significantly higher sector percentile ranking of 71.43%.
Looking at the 5-year growth, we see a mixed picture. While the revenue growth is negative, standing at -1.35% (sector percentile ranking of 41.67%), the earnings growth is outstanding at 295.59%, topping the sector percentile ranking. The dividend growth is also promising at 41.6%.
Conclusion:
Given the potential growth opportunities highlighted by analysts and Nokia’s proactive strategies, the stock could be a valuable addition to growth-orientated investment portfolios. However, the current challenges justify the ‘Hold’ recommendation from Stock Target Advisor for the short term.
