Deutsche Bank Gives Nokia’s Lumia Some Love Lifting Stock
Speculation about the performance of Nokia’s (NYSE:NOK) latest smartphones continued last week as Deutsche Bank put its weight behind Nokia’s claims of strong Lumia sales and reaffirmed its earlier expectation that the company will be able to meet the bank’s estimate of 2 million unit sales by the end of this quarter. [1] Nokia’s shares had tumbled almost 19% last week after a couple of analysts came out with very negative views about the company’s latest Windows Phone-powered smartphones. [2] Nokia’s reassurance that the Lumia 800 was performing extremely well and had helped the company post its ‘best ever first week’ of smartphone sales in the U.K. did little to assuage market concerns. [3] The once-upon-a-time leading mobile manufacturer has seen its market share dwindle in recent years, especially in the developing markets, as Apple’s (NASDAQ:AAPL) iPhone and handsets based on Google’s (NASDAQ:GOOG) Android software have piled on pressure in the smartphone market.
The Lumia 800 had so far been the subject of largely positive reviews and praise from many who saw the phone triggering a revival of Nokia’s fortunes. This resulted in a surge in market expectations and optimism returned to the stock. Late last month, after the Lumia was launched at a gala event in London, the stock even crossed our price estimate of $7 for a brief while. However, after the massive sell off witnessed last week, our price estimate is now 25% ahead of market price.
See our complete analysis for Nokia stock here
Speculation not good for the stock
The confusion surrounding the Lumia sales has been compounded by the company’s reticence with respect to the phone’s actual sales numbers. Nokia has been vague in its response to the analysts’ projections by terming the launch its “best ever first week” in the U.K and citing policy reasons for its inability to come out with individual sales figures before the quarterly results. In such a scenario, Deutsche Bank’s forecasts should give the stock a much needed breather, if the broader market holds up a bit.
We discussed how we believe that a lower-than-anticipated demand for the Lumia in European markets means more pain for Nokia’s stock in the coming quarters as its market share declines and investors lose faith in the company’s Microsoft partnership. (see Nokia’s Shares Tumble as Analysts Lower Lumia Sales Forecasts)
On the other hand, if Nokia does manage to meet sales forecasts for the quarter, it will be a sign of customers in developed markets taking to the company’s latest smartphone offering and the stock should see investors return.
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Notes:- Nokia to sell 2 million Lumia phones in Q4, Deutsche Bank says, BGR.com, November 25th, 2011 [↩]
- Nokia shares decline on Analyst report of Lower-Than-Expected Lumia Sales, Bloomberg, November 22nd, 2011 [↩]
- Nokia Lumia 800 sold out in U.K. despite rumors of weak demand, BGR.com, November 24th, 2011 [↩]