Shares of Nokia Are Heading for Their Best Day in Months as the Hard-hit Mobile Business Appears to Be Stabilizing

Shares of Nokia Corp. surged on Thursday after the Finnish telecom-equipment giant reported a strong turnaround in its fourth-quarter earnings. Investors responded positively as the company swung to a profit, marking its best trading session in months.

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Stock Performance and Market Reaction

In U.S. trading, Nokia’s American depositary receipts (NOK) jumped 7.8%, putting the stock on track for its biggest single-day gain since a 9.4% surge in October. Meanwhile, Nokia’s shares in Helsinki also saw their best performance since that month.

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Earnings Overview

For the fourth quarter of 2024, Nokia reported a profit of €813 million ($847 million), a significant rebound from the €33 million loss recorded in the same period a year earlier. Revenue climbed 10% year-over-year, reaching €5.983 billion, surpassing analyst expectations. According to projections from Visible Alpha, analysts had forecast a €709 million profit on €5.745 billion in sales.

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Key Growth Drivers

Nokia attributed its strong financial performance to:

• A 17% rise in network infrastructure sales, a crucial segment for the company.
• An 85% surge in revenue from Nokia Technologies, driven by several new licensing deals.

However, the mobile networks division, which has been a challenging area for Nokia, saw a 2% decline in net sales. Despite this, company executives noted improving demand in North America, with sales rising 18% in that region.

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Recovering from AT&T Setback

The company faced headwinds at the start of 2024 after losing a significant portion of its business with AT&T. Nokia’s President and CEO, Pekka Lundmark, acknowledged the challenges but remained optimistic about stabilizing the company’s mobile networks segment.

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"Even considering this, we expect net sales to be largely stable for mobile networks this year," Lundmark said in a call with analysts on Thursday. He added that Nokia's other customers are expected to offset the 4% revenue loss resulting from the AT&T deal.

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Dividend and Future Outlook

Nokia also announced a dividend proposal of €0.14 per share. Looking ahead, the company provided a 2025 comparable operating profit forecast in the range of €1.9 billion to €2.4 billion.

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However, analysts at Citi pointed out that the midpoint of this guidance (€2.15 billion) is 6% below market expectations of €2.3 billion.

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While some segments of Nokia’s business are performing well, concerns remain over the overall fundamentals of the company, particularly in mobile networks.

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A team of Citi analysts, led by Andrew Gardiner, highlighted that based on the price-to-earnings (P/E) ratio, Nokia’s Helsinki-listed shares are trading at 19 times projected 2025 earnings and 16 times estimated 2026 earnings.

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“We think too much of a recovery has been priced into shares,” Gardiner said.

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By comparison, rival Ericsson (ERIC) is trading at a lower valuation of 13 times 2025 earnings and 12 times 2026 earnings, while maintaining stronger fundamentals in mobile networks, according to the analysts.

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Nokia’s Q4 results reflect strong growth in its infrastructure and licensing business, though concerns over mobile networks persist. The company's ability to offset past setbacks, secure new deals, and maintain profitability will be key factors in determining its trajectory for 2025 and beyond.

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