Nokia Confident to Beat 2021 Guidance; Initiates FY2022 Margin Outlook

Multinational telecommunications giant Nokia (NYSE: NOK) has revealed its initial operating margin guidance for 2022 and updated its financial guidance for 2021.

Ahead of its upcoming earnings for the fourth quarter and full-year 2021 on February 3, the company said that it expects its comparable operating margin to exceed the 2021 guidance.

Likewise, shares of Nokia, with a current market capitalization of $35 billion, gained 1.1% to close at $6.24.

Expected Q4 Performance

During the fourth quarter, Nokia stated that its underlying business performance met expectations.

Positively, the company stated that “other operating income was higher than expected including further benefits from venture fund investments, leading to a stronger comparable operating margin exceeding the 2021 guidance”.

Full-Year 2021 Margins to Beat Expectations

Encouragingly, full-year comparable operating margin is expected to range between 12.4% and 12.6%, higher than the previously guided range of 10% to 12%. The margin expansion is attributable to venture fund investments, a one-off software contract in the second quarter, and reversals of bad debt provision and some one-time benefits.

For the full year 2021, Nokia now expects sales of €22.2 billion within the prior guidance range of €21.7 billion to 22.7 billion.

Introduces Operating Margin Guidance for 2022 outlook

Nokia has also introduced comparable operating margin guidance for the financial year 2022.

Based on continued improvements expected in the underlying business, supply constraints, cost inflation, and one-offs, the company forecasts a comparable operating margin of 11% to 13.5% in FY2022.

Analyst Recommendations

On January 7, Kepler Capital analyst Antoine Lensel reiterated a Buy rating on Nokia with a price target of $7.71 or €6.80 (23.5% upside potential)

Overall, the stock has a Strong Buy consensus rating based on 3 Buys and 1 Hold. The average Nokia stock price projection of $7.40 implies 18.6% upside potential from current levels. Meanwhile, NOK shares have jumped 55% over the past year.

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