MKM Bullish On Nokia's 5G Opportunity

Shares of Nokia Corporation NOK have underperformed the Nasdaq composite by 800 bps in the last three months.

The weaker performance is a result of investors perceiving the global 5G rollout as being slow, according to MKM Partners.

The Analyst

MKM Partners’ Michael Genovese maintained a Buy rating on Nokia with an unchanged $8 price target. 

The Thesis

Any potential fines resulting from the Alcatel-Lucent compliance issue would likely be lower than 125 million euros ($141 million), Genovese said  This translates to merely 0.02 euros per share for Nokia’s stock, Genovese said in a Tuesday note. 

The analyst expressed optimism regarding the rollout of 5G. 

“We see 5G builds moving ahead aggressively in South Korea and China, and solidly in the U.S. and Japan.”

Three South Korean carriers are scheduled to launch 5G to consumers in April, with nationwide coverage expected by the end of 2019, Genovese said. China’s two largest carriers also plan to launch 5G by June, he said. 

Verizon Communications Inc. VZ and AT&T Inc. T are moving ahead to launch 5G in 30 cities each in the U.S. and are planning for fixed 5G in some of the cities by the end of the year, the analyst said. 

Three Japanese carriers are launching mobile 5G in the back half of 2019, with nationwide coverage expected in 2020, Genovese said. 

“Nokia sells 5G-related products and services to every carrier listed on the table." 

Price Action

Shares of Nokia slipped slightly to trade at $5.82 on Tuesday morning.

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