Following a definitive agreement to acquire Infinera for $2.3 billion, Nokia Corp ADR (NOK: NYE) has taken a strategic step to expand its position in the optical network sector. The deal, which is dependent on regulatory and Infinera shareholder approval, could provide substantial benefits for Nokia.
Acquiring Infinera to Expand its Optical Network Presence:
To fund this acquisition, Nokia is set to pay at least 70% in cash and serve the remainder via its American depository shares (ADS). Through this strategic move, Nokia hopes to enhance its optical networking portfolio using the expertise and technology of Infinera, a recognized leader in this field.
This acquisition promises strategic growth possibilities; Nokia expects to see growth in comparative EPS within the first year and an increase above 10% by 2027. These prospects are potentially significant for investors and could indicate a favorable outcome for Nokia’s stock.
Stock Target Advisor’s Analysis of Nokia:
Stock Target Advisor has given it a “Hold” status. With a target price of $4.26, the stock carries a projected 1-year price change of 14.21%. This stock forecast showcases both the positive and negative aspects that influence investors’ decision-making process.
Looking at Nokia’s performance over twelve months, the company presents a 1-year capital gain of -10.12%, putting them in the 33.33 percentile ranking for capital gain in their sector. The dividend return traced at 3.39%, offered NOK a higher sector percentile ranking of 85.71%. The total return within a year, however, stands at -6.73%, which positions the company at a percentile ranking of 41.67% in their sector.
Conclusion:
Analyzing Nokia’s move to acquire Infinera signifies a strategic step towards growth and dominance in the optical network market. With favorable financial expectations tied with this acquisition, NOK seems to be on the right path.
