NOK Stock: Will Nokia Ever Regain Past Highs?

Nokia [NOK] was once one of the world’s most innovative tech names, with its ubiquitous devices powering the rise of the mobile phone.

However, somewhere following the launch of the iPhone in June 2007, Nokia’s stock market fortunes began to decline.

Since then things have been relatively quiet, with the Finnish multinational shifting its focus away from mobiles towards telecom networks. 

What has powered Nokia’s respectable 51.45% rise over the 12 months to March 28’s close? Perhaps more importantly, could we be witnessing the rebirth of a tech legend?

What’s New with NOK Stock?

March saw some exciting partnerships for Nokia. 

As announced on March 26, Deutsches Forschungsnetz e.V. has selected Nokia to upgrade and expand its core IP network, as part of an effort to accelerate scientific research. Vodafone [VOD] Idea is also trusting Nokia to upscale its IP backhaul for 4G and 5G experiences.

Elsewhere, at the beginning of March, Nokia’s stock rose 7.1% to touch its two-year high after announcing an integration with Lockheed Martin’s [LMT] 5G network.

The firm’s ambition is continuing to grow, with automation developments for Nokia Broadband Easy set to accelerate fiber rollouts by 20% and bring fiber to the next billion homes in rural or underserved areas.

Back in February, a leadership transition was announced, with Justin Hotard to take over from Pekka Lundmark as President and CEO. Boasting 25 years’ experience in the technology sphere, Hotard’s appointment has been met positively by investors.

It’s not all good news, however. 

On March 27, Bank of America [BAC] identified Nokia as one of the European hardware companies most exposed to US tariffs. Analysts did note NOK’s global reach could position it well to adapt to tariff risks better than firms such as Logitech [LOGI], but, as the macroeconomic landscape continues to shift under Donald Trump’s presidency, the outlook appears challenging.

How Has NOK Stock Reacted?

As previously mentioned, NOK has had an excellent 12 months, rising fairly consistently to achieve more than 50% growth.

Notable peaks were achieved following some of the news listed above: namely a 3.73% jump in the 48 hours following the announcement regarding Hotard’s position on February 10, and the 7.1% jump on the back of the Lockheed Martin news.

The more immediate past has seen some pullback. This is likely to be at least partly due to Bank of America’s less optimistic outlook on the stock. NOK dipped 3.87% between the close on March 18 and 28.

How Is the Competition Faring?

Nokia operates across a number of sectors. However, for the purposes of the below comparison, it is considered to be a telecommunications firm.

Ericsson [ERIC] is a longstanding rival. Like NOK, its focus has moved from mobile device manufacture to providing network infrastructure, primarily for the 5G and radio access network (RAN) markets.

ZTE Ord [000063:SZ] is another major player in the 5G market. Mostly focused on the Chinese market, ZTE offers a different perspective on Nokia’s competition.

Source: Yahoo Finance

While Ericsson and Nokia appear to be fairly well-matched, analysts have begun to question whether they are even in direct competition anymore. 

Nokia presents a mixed picture in terms of analyst recommendations, with three of the 11 analysts tracking it on Yahoo Finance suggesting ‘strong buy’, but only two rating the stock a ‘buy’. A majority of five reckon the stock is a ‘hold’. 

Ericsson’s outlook is bleaker, owing no doubt in part to the missed EPS targets of Q2 and Q4 2024. Of the eight analysts monitoring the stock, five rate it ‘hold’ and three offer a ‘sell’ recommendation.

Although ZTE seems to be set for significant growth in 2025, it’s important to note that the firm has missed EPS targets for the last three consecutive quarters, by $0.12, $0.15, and $0.30 for Q2, Q3, and Q4 2024 respectively.

That said, of the 18 analysts tracking ZTE on Yahoo Finance, 13 rank it ‘buy’, with one suggesting it is a ‘strong buy’.

Is NOK Stock Set to Continue Rising?

NOK’s star seems to be on the rise, but can the stock continue climbing in the coming months?

The Bull Case for NOK

With almost half of the analysts tracking the stock on Yahoo Finance rating NOK a ‘buy’ or ‘strong buy’, what are the most compelling reasons supporting the bull case for the stock?

Undervaluation Potential

Nokia is potentially undervalued compared to the market when looking at some key fundamentals. Forward price-to-earnings GAAP sits 39.19% behind the sector, and forward price-to-sales are similarly 53.07% below the sector.

While this could suggest room for growth, investors might also wish to consider whether Nokia has the underlying value that will enable the stock to reach close to its five-year highs again.

The 5G Expansion

By all accounts, Nokia has done an impressive job of restructuring to take advantage of the 5G revolution.

While there is still some way to go with the 5G rollout, the firm’s ability to pivot from mobile phone manufacturer to increasing network capacity could instill some faith in Nokia’s future.

Headwinds to Consider 

Investors may still have doubts surrounding Nokia’s future – and the following factors should certainly be taken into consideration.

Tariff Exposure

As mentioned above, Nokia has been identified as being particularly exposed to the negative effects of US tariffs.

With 26% of 2024’s sales coming from the US, there’s a significant risk of lost income.

Dividend at Risk

Seeking Alpha analysis reveals warning signs in Nokia’s data that have historically led to dividend cuts. While this is far from an exact science, investors looking to maximize dividend income might do well to research this further.

NOK earned an overall dividend safety grade F, including a sector relative grade D on its sustainable growth rate.

Conclusion

Nokia could be staging the resurgence of a generation, but the future for the stock is far from certain. Investors interested in the stock would do well to follow future news carefully.