At first glance, Nokia’s figures released at the beginning of February were “pretty bad”. Due to the US tax reform, there was a loss of 384 million euros, which exceeded the previous year’s value by almost twice. In addition, CEO Rajeev Suri dampened expectations for the current year. For example, projected market growth has been revised downwards from the original 2-5 percent to 2-4 percent. And the profit adjusted for special items is also expected to be lower in the current financial year than in 2017.
Apart from one-time items write-downs on corporate values and the costs of integrating the acquired rival Alcatel-Lucent, earnings per share on an adjusted basis rose in 2017 by 50 percent to 0.33 euros. This exceeded the expectations of the analysts and the investors reacted with massive gains. However, shareholders must first wait for further increases in corporate profits. For 2018, the Nokia management presented only an adjusted EPS between 0.23 and 0.27 euros. In 2020, it should then rise to 0.37 to 0.42 euros. In the long term, Nokia plans to distribute 40 to 70 percent of its adjusted EPS as a dividend to its shareholders.
Following the announcement of the figures for 2017, some analyst firms such as Credit Suisse, Societe Generale and Deutsche Bank revised its price targets for the Nokia share upwards. 15 stock experts are currently recommending to buy while 25 times a neutral recommendation is issued. There are 8 sales recommendations. The strong volatility of Nokia’s stock is reflected in the projected price targets in an extreme range. This ranges from $3.90 (BNP Paribas) to $7.50 (MKM Partners) and gives an average value of $5.44.
From a technical point of view, one can see the share of Nokia is in the middle range. This is exactly where the technology stock shot up in late 2016 and early this year. In early February, the 100-day line was also overcome, which is seen as a starting signal. Should the medium-term average line turn up in the coming weeks, a trend change signal would even emerge. Due to the jump in prices by 20 percent, however, the timing indicator Relative Strength Index (RSI) is now showing a slightly overbought situation. This increases the risk of an RSI sell-signal. At the latest in the area of the massive support zone, however, a potentially possible correction movement should end.