over 2 years ago • 2 mins
I’m Janak Raja, a venture capital fund analyst specializing in early stage healthcare and technology investments.
A long-term investment in Nokia (ticker: NOKIA). Nokia’s stock price has been hovering around 5 euros for the past few months. The company outperformed expectations in the first quarter and is catching up in its 5G capabilities.
Once the world’s biggest maker of mobile phones, nowadays Nokia focuses on telecoms infrastructure, having 22% of global market share.
In 2020 Nokia accounted for 22% of the network infrastructure market, with only Huawei and Ericsson larger. With 5G one of the breakthrough technologies of the next 10 years and other industries – such as edge computing and driverless cars – relying on it, governments will be pushing for more 5G infrastructure spending.
Market Leading Chinese companies Huawei and ZTE are being blacklisted in both 4G and 5G infrastructure, presenting a fantastic opportunity for incumbents Ericsson, Nokia, and Samsung.
This presents a growth opportunity for this value stock with a new CEO joining in 2020, Pekka Lundmark. Lundmark delivered significant shareholder value at the helm of Finnish energy company Fortum through clear strategy and vision. If he can deliver the same thing at Nokia there could be great returns for investors.
In the near term the share price could move to 6.50 euros. This is based on a free cash flow discount model based on analyst forecasts over the next 10 years and 0.2% perpetual growth thereafter.
Also Nokia holds a huge amount of intellectual property that could make it an acquisition target for companies such as Cisco.
These risks could be mitigated by holding a basket of 5G network companies as the overall sector is poised to do well in the coming years.
This insight was submitted by a community member for information and educational purposes. It doesn't represent the views of the Finimize team and shouldn't be taken as financial advice.
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