Nokia's 2.8% Rebound Draws Buy Calls, but the Cash Conversion Gap Remains Unresolved
Published on 10/24/2026 at 11:30 | Editorial boerse-global.de
Nokia shares closed 2.8% higher yesterday, a move that media reports linked to a pair of analyst upgrades. Handelsbanken and OP Corporate Bank both raised the stock to Buy with a 10 EUR price target, pushing back against the downbeat reading that followed Thursday's quarterly release. Rosenblatt Securities took a different route to a similar destination: the firm trimmed its target from $15 to $14 while keeping its Buy rating, citing lower valuation multiples across comparable companies and calling the prior selloff overdone.
The split between those two responses captures the tension running through the Nokia story. A lower target does not have to mean a sell call, and a rebound does not mean the concerns have evaporated. What the upgrades reflect is a reassessment of how heavily the market marked down the burdens on the business — not a verdict that those burdens have lifted.
Strong top-line momentum, a weaker bridge to cash
Thursday's report offered real evidence of operational improvement. Comparable revenue for the third quarter of 2026 came in at EUR 5,154 million, up 9% at constant currency and on a comparable portfolio basis. Comparable operating profit climbed 35% to EUR 605 million, while reported operating profit stood at EUR 196 million.
That gap between the comparable and reported figures is where the debate lives. Higher restructuring costs and negative free cash flow were among the points critics seized on after publication. Nokia also lowered its 2026 assumption for converting profit into free cash flow to a range of 35% to 55%, pointing to working capital investments and an accelerated restructuring program. Planned working capital spending, meanwhile, was raised by EUR 400 million.
Should investors sell immediately? Or is it worth buying Nokia?
None of that makes the spending irrational. It does mean the earnings line alone cannot answer how much financial room the company is actually generating. A rising operating profit and a weaker conversion of that profit into cash can coexist quite comfortably — and for now, they are.
AI and Cloud is the strongest card in hand
The bull case finds its best support in the AI & Cloud unit, where revenue jumped 123% and order intake rose 118%, according to Nokia's Thursday disclosure. That combination of realized business and fresh demand is hard to dismiss. What it does not do is settle the question of financial quality across the whole group. Explosive growth in one division says little about how efficiently the rest of the company turns sales into available funds.
Management left its 2026 comparable operating profit guidance untouched at EUR 2.1 billion to EUR 2.6 billion. That unchanged range sitting beside the more cautious cash flow assumption is precisely what makes the picture murky. The operating outlook held firm; a key assumption about how that result translates into spendable money did not. Beyond the current year, Nokia expects Optical and IP Networks combined to grow 25% to 30% in 2027 — a forward-looking projection rather than a reported result, but one that gives the buy case something to lean on.
Nokia at a turning point? This analysis reveals what investors need to know now.
January 28 is the next real test
Nokia will publish fourth-quarter and full-year 2026 figures on January 28, 2027. That date is the next scheduled checkpoint for the thesis of operational progress constrained by financial friction. Profit development will matter, but so will how convincingly management explains the interplay between growth, working capital and restructuring.
For now, the analyst optimism is understandable without being fully confirmed. Nokia has assembled genuine growth arguments. A more persuasive equity story emerges only when the financial execution catches up with them. Yesterday's advance front-loads some of that hope. Delivering the proof is still the company's job.
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