Nokia Q2 on Thursday: Performance improvement becomes challenging in a declining market

Af Atte Riikola
Based on the decline in Nokia's outlook, Ericsson's Q2 result and recent market research, the strongest pull of the 5G cycle has started cooling down and the market seems to be turning slightly downward in coming years. In a declining market, earnings growth is challenging and without it, it is difficult to see a significant recovery in Nokia's low valuation multiples. However, we expect the improved performance in recent years to hold its own quite well and, with improving cash flow in the next few years we expect abundant profit distribution from Nokia. Thus, the expected return is still at a good level, although not as attractive as previously estimated.