Nokia (NOK) Remains Focused on Key Strategic Priorities

On Apr 5, we issued an updated research report on wireless services provider, Nokia Corporation NOK.

Nokia is a leading player in the mobile and fixed network infrastructure with the industry’s most complete, end-to-end portfolio of products, services and licensing. The company is driving the transition of global enterprises into smart virtual networks by creating a single network for all services, converging mobile and fixed broadband, IP routing and optical networks with the software and services to manage them. Leveraging state-of-the-art technology, Nokia is transforming the way people and things communicate and connect with each other. These include seamless transition to 5G technology, ultra broadband access, IP and Software Defined Networking, cloud applications, Internet of Things, as well as security platforms, data analytics, and sensors.

Nokia remains focused on its strategy that hinges on four strategic priorities. The first priority of the company is to lead in high-performance end-to-end networks with its communication service provider customers. The second priority is based on its relentless pursuit to expand network sales to select vertical markets, specifically energy, transportation, public sector, technical extra-large enterprises and webscale players such as Google and Amazon. Building a strong standalone software business remains the third strategic priority of the company. The fourth pillar aims to create new business and licensing opportunities in the consumer ecosystem. Nokia benefited significantly in 2017 from its focus on these four pillars of strategy and remains well poised to benefit from them further.

In order to strengthen its leading position in the market, Nokia facilitates its customers to move away from an economy-of-scale network operating model to demand-driven operations by offering easy programmability and flexible automation needed to support dynamic operations, reduce complexity and improve efficiency. Consequently, customers can fulfill end-user demands by provisioning services in real time while automatically making optimal use of networks assets. The company is also continuously expanding its business into targeted, high-growth and high-margin vertical markets to address growth opportunities beyond its traditional primary markets.

With a diligent execution of operational plans, Nokia has outperformed the industry with an average return of 11.3% in the last three months against a decline of 6.9% for the latter.

Rollouts of next-generation 5G networks are anticipated to improve market conditions significantly in 2019 and 2020. Nokia’s Networks division is also expected to grow faster than the primary addressable market over the long term.

Nokia carries a Zacks Rank #2 (Buy). Other stocks in the industry worth considering include Comtech Telecommunications Corp. CMTL, NTT DOCOMO, INC. DCM and Orange S.A. ORAN, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Comtech Telecommunications has a long-term earnings growth expectation of 5%. It delivered an average positive earnings surprise of 111.4% in the trailing four quarters, beating estimates in each.

NTT DOCOMO has a long-term earnings growth expectation of 4.9%.

Orange has a long-term earnings growth expectation of 25.9%.

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