Merrill Lynch will cut its estimates on Nokia (NOK ).
Analyst Adnaan Ahmad said he is taking into consideration the company's revised mobile-phone margin estimate of reaching 20% no later than 4Q 2001. He says his $1.02 2001 EPS estimate could be cut to $0.85, and his 2002 estimate may be reduced by about 10% to $1.20.
Based on a 2001 estimate cut, Ahmad sees an immediate downside in the target price to $28. Long term, he believes Nokia deserves to trade back up to $50-$60. He maintained a near- and long-term buy rating as he believes margin pressure in mobile phones will be temporary. He also thinks Nokia's network infrastructure unit will continue to gain market share and maintain healthy margins in 2001.