Finnish telecommunications major Nokia (NYSE:NOK) gained in pre-market trading after providing an upbeat outlook for FY24. The company expects FY24 comparable operating profit in the range of €2.3 billion to €2.9 billion and free cash flow conversion from comparable operating profit between 30% and 60%.
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Management anticipates a tough first half in 2024 but expects an improvement in gross margin in the second half of the year. Still, Nokia sees some “green shoots” in the form of rising orders for its Network Infrastructure business. This is expected to drive an improvement in Network Infrastructure net sales during the second half of this year.
Moreover, Nokia’s Board of Directors has authorized the distribution of €0.13 per share to be paid out in FY23 and a quarterly dividend of €0.03 per share for shareholders of record on January 30, payable on February 8. The company also initiated a share buyback program worth €600 million.
In the fourth quarter, the telecommunication company generated revenues of €5.7 billion, a decline of 21% on a year-over-year constant currency basis as macroeconomic uncertainty has reduced telecom operators’ spending on network infrastructure. The company reported comparable diluted earnings in the fourth quarter of €0.1 per share compared to €0.16 in the same quarter last year.
In addition, Nokia’s Board of Directors approved the long-term incentive (LTI) plan and the employee share purchase plan (ESPP) for the period between 2024 and 2026. As part of the company’s LTI plan, it may award eligible executives and employees with performance and restricted shares, and the maximum number of shares that may be issued under the LTI plan in 2024, 2025, and 2026 is 350 million. Under the ESPP plan, the maximum number of shares that can be issued during the same timeframe is 45 million.
Is NOK a Good Stock to Buy Now?
Analysts remain sidelined about NOK stock with a Hold consensus rating based on two Buys, two Holds, and one Sell. NOK stock has dropped by more than 20% over the past year, and the average NOK price target of $4.60 implies an upside potential of 34.9% at current levels.
