Why Nokia Has Multiple Catalysts, Multiple Suitors For HERE Business

In a report issued Thursday, RBC Capital Markets associates Ameet Prabhu, Spencer Green and analyst Mark Sue shared their impressions on Nokia Corporation (ADR) (NYSE: NOK), following their lunch with CEO Rajeev Suri.

RBC believes the company’s stock carries the highest potential return in their large-cap coverage universe, “considering the numerous catalysts ahead” (especially strong licensing activity and a robust pipeline).

Their meeting with Suri provided them with “an expansive market view, highlighting opportunities for cost synergies post Alcatel Lucent and firming Network OMs.”

The analysts highlight that there are several parties interested in Nokia’s HERE business, including location-driven technology companies and car makers. The company has indicated, however, that it still hasn’t completed its strategic review, and continues to consider the option of keeping its HERE assets. Given the “high level of interest and impending Networks focus at Nokia,” RBC believes a price tag around 3 to 3.5 billion euros may be reasonable. Moreover, the SAMSUNG ELECT LTD(F) (OTC: SSNLF) arbitration is to be concluded soon.

These are both “positive value-unlocking mechanisms.” Thus, while the analysts maintain a Sector Perform rating, they increased the price target from $7 to $8 (€7).

The firm models earnings of $0.25 per share on revenue of $13.5 billion for 2015, and earnings of $0.30 per share on revenue of $14 billion for 2016.