Why We Revised Nokia’s Price Estimate

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Q1 2016 was the first quarter that Nokia reported its results as a combined entity with Alcatel-Lucent. Based on the updated structure, we revised our price estimate for the company. While our overall estimated valuation for the company has increased by 20%, the greater number of outstanding shares has resulted in a 15% reduction in our price estimate for Nokia’s stock. Below we outline the changes to our model:

  • Forecast for the licensing segment revenue increased due to the inclusion of “group common and other” segment
  • Wireless infrastructure market share increased with Alcatel-Lucent’s inclusion
  • EBITDA margins and free cash flow projections lowered due to the addition of significant loss-making segment “group common and other” and relatively low margin Alcatel-Lucent wireless infrastructure segment

Nokia price revision

corrected second part nokia

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Nokia
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