Nokia’s Stock Looks Cheap as Lumia Could Light up Demand

NOK: Nokia logo

Nokia’s (NYSE:NOK) stock took a hit Thursday and declined by more than 6%. The broader market sold off heavily on European concerns and it now looks like the the first version of the Lumia phone will be a lower end version sold through T-Mobile rather than AT&T as some had speculated. The company also announced plans to sell off its luxury subsidiary Vertu. [1] With the stock down 20% or so during the last month, we believe that its discounting the potential impact from the Lumia line of smartphones. DigiTimes came out with a report that component suppliers in Taiwan expect orders from Nokia to grow 20% in 2012 as demand for Lumia smartphones increases. [2] Lumia smartphones are the first devices that Nokia has introduced based on Microsoft’s (NASDAQ:MSFT) Windows Phone platform.

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Our $7 price estimate for Nokia stock is about 40% above market price.

See our complete analysis for Nokia stock here

Nokia looking at U.S. markets now

Last month, Nokia launched Lumia line of smartphones in Europe and on December 14th it could launch it in the U.S. as well. It looks like T-Mobile could be the one to start selling these phones rather than through AT&T which implies a lower potential impact with its inaugural Windows Phone launch in the U.S. [3] Lumia smartphones will have some attractive features such as Nokia Drive, which is a full-fledged personal navigation service with free turn-by-turn navigation and dedicated in-car user interface. It also sports Nokia Music introducing MixRadio, a free global music streaming application with hundreds of channels.

Favorable for Nokia stock

The U.S. will be an important market for Nokia as it is the most lucrative market for mobile phone companies. Nokia has traditionally lagged behind Apple (NASDAQ:AAPL) and Samsung in the smartphone market. If Nokia can find success in the U.S., it could boost its stock and if DigiTimes’ report is a good indication of potential demand, this launch could be another catalyst for its stock.

Understand How a Company’s Products Impact its Stock Price at Trefis

  1. Nokia looks to sell luxury Vertu unit: report, Reuters, December 8th, 2011 []
  2. Nokia orders for upstream suppliers to grow 20% in 2012, say sources, DigiTimes, December 7th, 2011 []
  3. T-Mobile Sets Launch Event Wih Nokia For Dec 14, Forbes, December 7th, 2011 []