Credit Suisse’s Telco Equipment team is making a rather bold call this morning by upgrading Nokia (NYSE:NOK) to Outperform from Underperform with a price target of $8 (prev. $5.5).
– Actually the upgrade is part of a broader call as the firm is raising their Global 2012 handset estimates while also painting a positive scenario for Microsoft’s Windows Phone initiative. They believe WP will become the #3 smartphone OS.
Ok, back to Nokia (NYSE:NOK):
CSFB believes Nokia will start to realise the benefits of transition from Symbian to Windows Phone from 2H 2012 as it can capture 13% global smartphone share in 2013. This will drive a long term turnaround EPS of €€ 0.60 (which is 50% above consensus).
They believe that Nokia’s new Windows Phone-based smartphones are poised to gain traction based on three key factors: 1) strengthening developer/carrier support for the Windows Phone ecosystem, as confirmed by Credit Suisse’s proprietary survey of more than 25 carriers globally, as well as recent application developer surveys and data points, 2) aggressive pricing of Nokia’s Windows Phone devices in the range of €€ 180-300 from the outset, and 3) the quality of the Windows Phone OS platform combined with Nokia’s brand, distribution, scale, and IPR.
Based on these three drivers, the firm believes that the Windows Phone platform will eventually command a significant-enough market share to become the #3 OS in the smartphone market. In fact, the Credit Suisse Telecommunications Equipment Team believes that Nokia will command 13.2% of the total smartphone market by calendar year 2013.
In Credit Suisse’s proprietary survey of more than 25 carriers globally, Windows Phone received higher ratings than RIM in every category surveyed except for messaging. This data further reinforces CSFB’s belief that the Windows Phone platform will eventually able to command a significant-enough market share to become the #3 OS in the smartphone market.
The notes are long, so I can publish only a tiny fraction of it all.
Notablecalls: It’s very difficult to find a Buy rated analyst in NOK these days, let alone a Tier-1 one. So this means the upgrade is likely to generate meaningful attention. A major change in view.
I’m thinking 5-7% move in store.