Barron's adds more color to the NOK upgrade by GS:

 

12:02 PM ET

Nokia Rising: Cost Cuts and Synergies Underestimated, Says Goldman Sachs By Tiernan Ray

Shares of Nokia (NOK) are up 12 cents, or 2%, at $5.66, after Goldman Sachs’s Alexander Duval raised his rating on the shares to Buy from Neutral, with a $6.30 price target, writing that the company is “about to enter its mostintensive cost-cutting phase and management has historically shown itself adept at delivering efficiencies,” which should boost profits above Street expectations.

Nokia shares are down 27% this year, he writes — he’s referring to the ordinary shares traded in Helsinki, with ticker “NOKIA.HE,” in part because of a weaker-than-expected outlook for its main “Networks” business. He thinks this is too much, given Nokia has “limited EU macro correlation,” and given margins have already reset.

“We note consensus for FY16 Networks EBIT has fallen by 16% and group EBIT has fallen by 21% i.e. a significant earnings reset since the start of the year,” writes Duval.

Duval also raises his estimates for the “synergies” the company will obtain through its acquisition of Alcatel, writing “Nokia has already stated it can achieve >€0.9 bn in synergies by 2018, and our updated analysis suggests it can achieve €1.15 bn.”

Duval’s estimate for this year’s networks division revenue goes to €23.06 billion from €22.977 billion, thanks to higher mobile networks revenue. His Ebitda for the division goes to €2.4 billion from €2.376 billion. For next year, he goes to €23.737 from €23.65 billion in revenue, and to €3.185 billion in Ebitda from €2.97 billion.