Nokia stock rallies after Raymond James says it’s OK to buy now

The U.S.-listed shares of Nokia Corp. got a boost Monday, after Raymond James analyst Simon Leopold upgraded the Finland-based network infrastructure company, citing an improving competitive position and market opportunities that exceed expectations.

Leopold raised his rating to outperform, after being at market perform since Sept. 8, 2020. He set a price target for the stock at $6.50, which implies about 30% upside from current levels.

The stock
jumped 3.7% in afternoon trading. It has tumbled 19.8% year to date, while the S&P 500 index
has shed 12.6%.

“We believe Nokia’s business has inflected and management has made progress in rebuilding credibility,” Leopold wrote in a note to clients. “We consider the recent share repurchases and likely re-introduction of a dividend great signals regarding management’s confidence, yet low valuation multiples demonstrate investor skepticism.”

Nokia hasn’t paid a dividend for its U.S.-listed stock since July 2019.

Regarding credibility, Leopold said Sweden-based telecommunications equipment company Ericsson’s (Telefon AB L.M. Ericsson
) governance missteps have impacted how investors view Nokia.

Earlier this year, activist investor Cevian Capital had called for corporate governance changes at Ericsson to restore credibility, after the company disclosed “serious breaches” of compliance rules over its dealings with Iraq.

Leopold said Ericsson’s issues have weighed on Nokia’s stock “because investors care,” but he doesn’t believe these issues have affected carrier decisions. “In our recent meeting with Nokia’s CEO, he emphasized Nokia’s commitment to integrity, but recognizes that every company lives in a glass house,” Leopold wrote.

Regarding Nokia’s fundamental outlook, Leopold said that while investors appear to be “skeptical” about customer demand and order patterns, he believes customer demand is “genuine.”

“We are most upbeat on…


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