The Finnish company yesterday had an analyst consensus rating of 2.84 on a Bloomberg scale that goes from 1 for the most sell recommendations to 5 for the most buys. By today, the rating had climbed to 3.04.
“This transaction comes as a surprise to us,” wrote analysts at Sanford C. Bernstein & Co. led by Pierre Ferragu in London in a report. They raised their recommendation to market perform, or hold, from underperform, or sell.
“Our short thesis on Nokia has always been grounded on the assumption that nobody would dare to buy out a business of that size and in such a difficult position,” the analysts wrote. “We recognize today we underestimated this upside risk.” Bernstein had an underperform rating on the shares since June 2011 and a share-price estimate of 1.50 euros. The brokerage has set a new forecast of 3.60 euros.
Kai Korschelt, an analyst at Deutsche Bank AG who had a sell recommendation on Nokia for the past year, today raised the brokerage’s recommendation to hold, while leaving its price estimate at 2.20 euros. Credit Suisse Group AG increased its recommendation to neutral from underperform, and lifted its price forecast to 4.80 euros from 2.25 euros.
Nokia plunged 98% between its highest price in 2000 and its subsequent low in 2012 as the company reported slumping phone sales and shrinking margins. The retreat forced Nokia to leave the Euro Stoxx 50 Index in March this year. The company had been a member of the benchmark gauge since the index’s inception in February 1998.
As part of today’s announcement, Nokia’s devices and services unit, which accounted for more than half of the company’s 2012 revenue, along with 32,000 employees, will transfer to Microsoft. Nokia Chief Executive Officer Stephen Elop, 49, will return to Microsoft after a three-year stint running the Finnish manufacturer.