The lack of change is keeping the narrative the same for Nokia (NYSE:NOK). NOK stock is in desperate need of a catalyst. However the best it’s managed to muster is getting tagged as a meme stock in January. Not that it can really take credit for that.
I can’t say there’s anything to particularly dislike about Nokia. There’s just nothing to get investors excited. And this is particularly true after a year in which, despite the pandemic, the company had a favorable geo-political environment.
Former President Donald Trump reversed at least 25 years of our nation’s policy towards China, and in particular with Huawei. This created an environment in which Nokia was able to competitively bid in several markets.
And on paper, Nokia was able to take advantage of its opportunity. Not only did the company score a contract with the largest telecom company in the United Kingdom. They also reached the symbolic mark of 100 5G contracts.
However those contracts have not translated into revenue … yet. This is problematic for two reasons that Josh Enomoto pointed out in a recent article. First, Nokia’s rival Ericsson (NASDAQ:ERIC) outperformed Nokia despite facing the same obstacles from the novel coronavirus. And second, investors are growing weary of hearing Nokia lay the blame for their difficulties at the feet of the virus.
It may be true, but it’s Nokia’s job to supply the hope. And so far the company has not delivered full-year guidance for 2021.
Beware the Ides of March?
Nokia has another chance to inspire investors in March. And while it’s not technically the Ides of March, the company says it will issue full-year guidance at its Capital Markets Day a few days after on March 18. At this time, the company’s dividend will also be discussed.
This will be an opportunity for the company to give investors something to believe in. However, the “Outlook Assumptions” in the company’s last earnings report don’t inspire much hope that the company will delivery news that will give investors a meaningful catalyst.
Analysts Aren’t That Impressed
Right now, the consensus price target among analysts points to a gain of around 27% for NOK stock. However, if you’re going to wade into the penny stock waters, you can find many other stocks that have more juice than Nokia.
The fact is that generally speaking, the period after earnings is the time for analysts to increase their price targets. In the case of Nokia, analysts have remained quiet. To be fair, they could be waiting for the company’s report in March. But in most cases, analysts don’t like surprises. They have sources. Insiders talk. So the fact that the analyst community is staying quiet may speak loudly.
NOK Stock Is Going Nowhere Fast
If you were game enough to buy NOK stock at its pandemic low, you’re sitting on a pretty sweet gain of approximately 65%. However if you bought that stock just a couple weeks earlier, your investment is as flat as a pancake. OK to be fair, you’re sitting on about a 2% gain.
However, the larger point is that despite getting caught up in the Reddit mania in mid-January, Nokia is back to trading almost exactly where it was before the pandemic. And this was after a year in which many companies benefited from the build-out of the 5G infrastructure.
That should tell you almost everything you need to know about Nokia stock. But in case it doesn’t, here’s another way to look at it. Aside from Huawei, which is not publicly traded, ERIC stock is up nearly 50% in the last 12 months.
If you have only one company to invest in, which one are you going to choose?
On the date of publication Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for Investor Place since 2019.