Bernstein Research analyst Pierre Ferragu this morning downgraded Nokia (NOK) shares to Market Perform from Outperform, while trimming his price target on the shares to $14, from $17. He also cuts his 2010 EPS forecast to 89 cents, from $1.12, and trims his 2011 outlook to $1.13, from $1.36.
Feragu writes that his previously bullish stance had been based in part on a belief that the company had maintained and stabilized a leading position in handsets; he now says that he “over-estimated Nokia’s stability,” as gross margin weaken. In reporting Q1 results, the company lowered its forward margin guidance, and Ferragu contends “this isn’t a temporary weakness but a trend that the next product portfolio refresh only will stop.”
Meanwhile, he also said he was wrong in expecting earnings momentum at Nokia. The company, he writes, “is unlikely to generate the positive earnings momentum we were expecting.”
Ferragu says the timing of an improvement in Nokia’s results is uncertain, and contends that no recovery is likely before 2011.
On Friday, meanwhile, Citigroup analyst Zahid Hussein cut his rating on the stock to Hold from Buy, “on the back of disappointing Q1 results and lowered Q2 outlook…we see no compelling reason to own the ADR in the near term.”
NOK is down 36 cents, or 2.8%, to $12.40.
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