Kepler Cheuvreux Lifts Nokia to Buy Amid Signs of Strong Sales Bounce; Shares Climb 4%

Nokia Oyj (HE:NOK) saw its shares surge over 4% after Kepler Cheuvreux raised its stance on the Finnish telecom heavyweight from "hold" to "buy." The upgrade comes on the back of forecasts anticipating a tangible rebound in sales, operating margins, and cash flow in the years ahead.

The broker upped its price target to €6.60, signaling a potential 19% gain from the stock's close at €5.56 on January 6. Analysts pointed to the recent 15% dip in Nokia's share price from recent peaks, framing the current valuation-roughly 13 times estimated 2026 EBIT-as an appealing entry point.

The uplift isn't isolated to Nokia's share price; it reflects broader stabilization in the global network equipment market, which had shrunk 16% during 2023-2024. This contraction stemmed from inventory corrections, macroeconomic headwinds, and the tail end of the 5G rollout, a phase where Nokia especially felt the pinch, grappling with an 18% sales decline and losing a key 5G contract with AT&T.

Kepler Cheuvreux projects the addressable market in this space will gain momentum, growing at a 5% compound annual rate through 2028, with the network infrastructure segment potentially expanding by 9% annually. Sales in network infrastructure alone are expected to climb by 7% per year until 2028, with IP networks and optical networks growing at roughly 8% and 12%, respectively.

Margins look set to improve as well, with adjusted operating margins predicted to hit 13.1% by 2028, up from an expected 9% in 2025. The forecast attributes this to Nokia focusing on profitable fixed network markets, benefiting from economies of scale particularly in IP networks, and the realization of €200 million in synergies tied to its acquisition of Infinera.

The growing demand for artificial intelligence and cloud applications is another bright spot. Since early 2025, Nokia's network infrastructure division has secured orders totaling €1.5 billion for AI and cloud solutions, which now make up an estimated 6% of the group's total sales.

While the mobile infrastructure sector is not expected to grow significantly, Nokia is emphasizing margin expansion here. Adjusted operating margins in this segment could rise to 15.2% by 2028, from 13.4% seen in 2025, even as sales stay relatively flat.

Overall, Kepler Cheuvreux forecasts little change in Nokia's sales in 2025 but anticipates a 4% sales rebound from 2026 through 2028. Free cash flow is expected to inch higher, potentially reaching €2 billion by 2028, while the net cash position may climb to about €6.4 billion, nearly doubling the expected €3.9 billion at the end of 2025.

Cost-cutting efforts play a role too. Nokia aims for gross savings of €1.2 billion by 2026 and has already banked €800 million in reductions through the first three quarters of 2025. That's helping offset a margin dip in 2025, a year impacted by difficult comparisons to 2024, when the company benefited from one-off gains exceeding €700 million.