Nokia Oyj

Nokia Oyj (NYSE: NOK) is a Finland-based company engaged in the network and Internet protocol (IP) infrastructure, software, and related services market. The Company's businesses include Nokia Networks and Nokia Technologies. The Company's segments include Ultra Broadband Networks, IP Networks and Applications, and Nokia Technologies.

Recent Business and Financial Updates

• Evolution of Nokia’s Strategic Direction: Since 2019, Nokia Corporation has undergone a significant strategic transformation to strengthen its position in the global technology market. The company initially refocused on leading in high-performance, end-to-end networks in 2019, followed by the adoption of a new operating model in 2020 to enhance agility and responsiveness to market changes. In 2021, Nokia introduced a three-phase strategy aimed at resetting, accelerating, and scaling its business. By 2023, Nokia refined its corporate strategy, establishing six strategic pillars and refreshing its brand to align with emerging trends in connectivity and digital transformation. These efforts have positioned Nokia to capitalize on opportunities in 5G, data centers, and AI, as evidenced by its recent performance.
• Organizational and Leadership Enhancements: Nokia has implemented substantial organizational and leadership changes to support its strategic goals. In 2020, Pekka Lundmark was appointed President and CEO, bringing a renewed focus on innovation and market leadership. The company transitioned from three reportable segments in 2019 to four business groups by 2021, improving operational efficiency and market alignment. Changes in the Group Leadership Team structure and composition have further strengthened Nokia’s ability to execute its strategy, with a clear emphasis on technological leadership and customer-centric solutions. These leadership adjustments have been critical to Nokia’s improved performance in recent years.
• Financial Performance and Resilience: Nokia’s financial performance over the past few years has shown resilience and recovery, particularly in 2024. In the fourth quarter of 2024, net sales increased by 9% year-over-year in constant currency (10% reported), driven by strong growth in Network Infrastructure, Nokia Technologies, and Cloud and Network Services. The comparable operating margin for Q4 rose by 380 basis points to 19.1%, reflecting higher gross margins, cost control, and contributions from Nokia Technologies. For the full year 2024, despite a 9% decline in net sales (7 percentage points due to India), Nokia achieved a comparable operating profit of EUR 2.6 billion, demonstrating its ability to maintain profitability amidst market challenges.
• Market Leadership in Key Technologies: Nokia has established itself as a leader in several critical technology areas, enhancing its competitive edge. The company is a frontrunner in 5G-Advanced networks and is actively preparing for 6G, leveraging its industry-leading FP4-based products in Network Infrastructure. In Mobile Networks, Nokia aims to maintain technological leadership in 5G/NR and related innovations, while in Cloud and Network Services, it is targeting growth in enterprise private wireless and core network solutions. Nokia’s strong patent portfolio, particularly in mobile communications, and its leadership in patent licensing, further solidify its market position, providing a stable revenue stream and reinforcing its role in global connectivity.
• Key Strategic Initiatives and Developments: Recent strategic initiatives have been pivotal to Nokia’s improvement. In 2024, Nokia expanded its presence in the data center market through partnerships with major players like Microsoft and Nscale, and alliances with Kyndryl and Lenovo for data center switching products. The company also completed the acquisition of Rapid’s technology assets to boost its R&D in Network as Code, aiming to help operators automate and monetize their networks. Additionally, Nokia sold Alcatel Submarine Networks (ASN) to the French State in 2024, allowing it to focus on higher-growth areas. Share buyback programs, including a EUR 600 million repurchase completed in November 2024 and a new EUR 900 million program, demonstrate Nokia’s commitment to returning value to shareholders.
• Sustainability and Responsible Business Practices: Nokia has prioritized sustainability as a core component of its strategy, aligning with global trends and customer expectations. The company is committed to reducing its environmental impact, targeting a 50% reduction in emissions by 2030, and leveraging industrial digitalization to enhance operations. Nokia also emphasizes security, privacy, and responsible business practices, while actively working to bridge the digital divide through initiatives that promote digital inclusion. These efforts not only strengthen Nokia’s reputation but also position it as a trusted partner in a rapidly evolving technological landscape.
• Outlook and Future Growth Targets: Looking ahead, Nokia is optimistic about its future, with CEO Pekka Lundmark noting that improving market trends observed in 2024 are expected to persist into 2025. For the full year 2025, Nokia projects a comparable operating profit of between EUR 1.9 billion and EUR 2.4 billion, with free cash flow conversion from comparable operating profit targeted at 50% to 80%. Long-term targets for 2026 include net sales growth exceeding market rates, a comparable operating margin of at least 13%, and free cash flow conversion of 55% to 85%. These goals reflect Nokia’s confidence in its strategic direction, leadership in 5G and beyond, and ability to capitalize on emerging opportunities in AI and data centers.

Technical Observation (on the daily chart):

The Relative Strength Index (RSI) over a 14-day period stands at a value of 62.08, currently upward trending nearing an important resistance of USD 5.00, with expectations of a consolidation or upward momentum once this USD 5.00 is broken on the upside. Additionally, the stock's current positioning is above both the 50-period SMA and 200-period SMA, which may serve as dynamic short to medium-term support levels.

Fundamental Valuation & Recommendation

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is February 19, 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.