Nokia Surges 32.9% in a Year: Should You Buy the Stock?

Nokia Corporation NOK has surged 32.9% over the past year compared with the industry’s growth of 41.2%. The company has underperformed compared to its peer, Ericsson ERIC, while outperforming Juniper Networks, Inc. JNPRNokia is well-positioned for the ongoing technology cycle, given the strength of its end-to-end portfolio. Leveraging state-of-the-art technology, Nokia is transforming the way people and things communicate and connect with each other. These include a seamless transition to 5G technology, ultra-broadband access, IP and Software Defined Networking, cloud applications and Internet of Things.Image Source: Zacks Investment ResearchNOK Rides on Healthy Demand TrendsNokia has been developing its 5G portfolio, strengthening AirScale and advancing the capabilities of its ReefShark chipset. The company currently has 319 commercial 5G deals with communications service providers globally. It has 110 live 5G networks, both public and private. Its installed base of high-capacity AirScale product, which enables customers to quickly upgrade to 5G, is growing fast.Nokia has entered into a three-year agreement with Vodafone Idea Limited to enhance and expand its 4G and 5G networks in India. Nokia also secured a multi-year deal with another major telecom enterprise in India, Bharati Airtel, to enhance and expand 4G and 5G network infrastructure across key regions of India. The largest telecom service provider in Taiwan, Chunghwa Telecom, has opted to leverage Nokia’s cutting-edge connectivity and technology solutions to modernize its network across central and southern Taiwan. One of Europe’s largest network operators, Deutsche Telekom, has opted to utilize NOK’s industry-leading portfolio to advance Open RAN (Radio Access Network) deployment in Germany.Strong Emphasis on Innovation is a Major Tailwind for NOKThe company recently expanded its Wi-Fi 7 portfolio with the launch of a cutting-edge Wi-Fi 7 gateway aimed at enhancing mesh networking capabilities for service providers. This tri-band device, dubbed Beacon 19, is set to deliver an impressive capacity of up to 19Gbps, addressing the growing demands of streaming, online gaming, smart home technologies and security applications within the home environment. Nokia achieved a significant milestone in global connectivity by completing the world’s first trial of 800 Gigabit Ethernet (800GbE) service in collaboration with Windstream Wholesale and Colt Technology Services. This pioneering test connected London with Chicago over an impressive 8,500 km route encompassing subsea and terrestrial networks. It marks a major advancement in service bandwidth, effectively doubling capacity to support a range of advanced applications, including AI-driven data center networking, content delivery networks and connections for financial trading hubs.The research wing of the company Nokia Bell Labs is collaborating with e& in UAE to create responsible AI solutions for sustainable enterprise and industrial automation applications and accelerate innovation concepts toward real-world deployments.NOK Affected by Margin ErosionNokia's Mobile Networks business is facing intensifying competition in some accounts as rivals seek to take share in the early stage of 5G. Some of its customers have reevaluated their vendors in light of security concerns, creating near-term pressure for the company. Despite recent customer wins, the demand environment remains weak in the Asia Pacific region. Growing geopolitical volatility in the Middle East is a concern. The company has significant international exposure. This gives rise to some concerns regarding its growth potential in the coming quarters in light of macroeconomic and geopolitical turmoil afflicting some economies.End NoteNokia’s robust 5G portfolio is increasingly gaining traction among enterprise customers. The company’s strategy to expand its business into targeted, high-growth and high-margin vertical markets to address growth opportunities beyond its traditional primary markets is a positive. Renewals of smartphone licensing agreements, positive trends in the automotive and IoT space are driving growth in Nokia Technologies segment. Growing investment in broadband access in North America is driving growth in the Network Infrastructure segment. Its cost reduction initiative will likely boost profitability in the long run.However, despite this signal of market recovery, slow sales revival in the Optical Networks vertical is a headwind. Demand softness in the Mobile Networks segment remains an overhang for the company. Owing to the persistence of market uncertainty, the company has downgraded sales projections for fiscal 2024 and also reduced its operating margin target for fiscal 2026. With a Zacks Rank #3 (Hold), NOK appears to be treading in the middle of the road, and investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 228 positions with double- and triple-digit gains in 2023 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ericsson (ERIC): Free Stock Analysis Report Nokia Corporation (NOK): Free Stock Analysis Report Juniper Networks, Inc. (JNPR): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks