Nokia: Calculating In “The Survivorship Premium”

Goldman Sachs analyst Tim Boddy today upped his rating on Nokia (NOK) to Neutral from Sell, asserting that emerging market risks to the story are now better understood, earnings estimates and guidance are now more realistic, and products risks “are starting to reduce.” In a research note, Boddy asserts that while macro uncertainty remains high, “Nokia’s ’survivorship premium’ is likely to expand if the outlook worsens further.” In other words, he writes, “industry conditions are now so bad that any further deterioration is likely to benefit Nokia as its rivals struggle to survive.” He also says that Nokia’s smart-phone portfolio is improving, reducing risk in 2009 after a poor product year in 2008. Boddy trimmed his 2008 EPS estimate to $2.04 from $2.15; for ‘09 he goes to 98 cents from $1.23. NOK today is up 40 cents, or 2.8%, to $14.74. (link)