After years of pessimism from the analyst community one analyst, Town Hall Investment Research analyst Jamie Townsend this morning upped his rating on Nokia to Buy from Avoid.
“Our renewed enthusiasm is primarily driven by Nokia’s smartphone business and our belief that long term the company is now poised to slowly re-establish itself as a meaningful player in smartphone markets around the world,” Townsend writes in a research note.
“While we believe that Q1 and Q2 2012 will continue to show the struggle between the death of Symbian and the rise of WP7, we also believe the pieces are now in place for a gradual reversal in the market share losses experienced in the last three years. Specifically, we are expecting positive unit surprises in the U.S. and Western Europe over the next two quarters, albeit coming off a very low base and expectations. While only a wild card right now, we also believe that some sort of partnership between Microsoft, Nokia and RIM is now a real possibility.”
But the analyst adds that after major management changes, the Microsoft alliance and early indications of success for the Lumia line of Windows-based phones, “we now believe that 2012 will mark the year when Nokia reverses the negative trends of the recent past.” Townsend isn’t looking for a rapid rebound, but assets that “consistent signs of improvement in the smartphone segment in particular, will bring investors back to the shares.”
He suggests that buyers may want to get into the market now, while the share price is low, rather than wait for the signs to be abundantly clear to everyone and the share price much higher. He did not have much good to say about RIM however, saying it was where Nokia was a year ago, on the decline and with no clear way forward, but that MicroNokia may still come to their rescue also.