Nokia's Upgraded Price Targets Come With a Catch: The Free Cash Flow Is Still Negative
Published on 10/24/2026 at 03:02 | Editorial boerse-global.de
Two broker notes landed on Nokia on the same day, and they point in opposite directions. Inderes lifted its rating from "Sell" to "Reduce" and raised its price target from EUR 6.50 to EUR 7. Handelsbanken went further, upgrading the stock from "Hold" to "Buy" and reaffirming a EUR 10 target. Both houses acknowledge the same improved operating numbers. They simply disagree on what those numbers are worth.
That disagreement is the real story for anyone weighing Nokia right now. The Finnish vendor's comparable operating profit for the latest quarter came in at EUR 605 million, comfortably ahead of Inderes' own EUR 435 million estimate. Revenue reached EUR 5,154 million, up 9% at constant currency, and the comparable operating margin settled at 11.7%. Stripping out one-off items that weighed on the reported result, Inderes raised its earnings forecasts for the coming years by 6–7%.
A Beat That Doesn't Settle the Argument
The caveat is where the two houses part ways. Inderes flags that free cash flow stayed negative as working capital swelled, which is why it argues the adjusted profit line alone isn't enough to justify a more generous rating. Handelsbanken reads the same quarter as an overreaction in the share price and a buying opportunity. It projects adjusted earnings per share growth of 21% next year, followed by another 11% the year after.
The split matters because Nokia's own guidance has already shifted the yardstick. Alongside the quarterly report, the company put cash flow conversion at 35% to 55%, citing working capital investment and an accelerated restructuring program as drags. Management held firm on its comparable operating profit outlook for 2026 of EUR 2.1 billion to EUR 2.6 billion — no downgrade there. The tension between an intact profit target and a softer cash conversion rate is precisely the knot investors have to untie.
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Where the Growth Is Supposed to Come From
Nokia's longer-range ambitions are just as demanding. Its own operating profit target for the year after next runs from EUR 2.7 billion to EUR 3.2 billion. For Optical Networks and IP Networks combined, the company expects revenue growth of 25–30% next year. It did not break that figure down by segment or specify a precise measurement basis, so the forecast describes strong combined expansion without allowing a clean read on either business. Integrating Infinera is the other concrete milestone against which those expectations will be judged.
The AI networking push is meant to underwrite all of this. Nokia unveiled new capabilities for AI-driven radio access networks and a sovereign platform for AI agents, and pointed to testing and development work with BT, Deutsche Telekom, Elisa and Orange. The collaboration with carriers isn't confined to statements of intent: activity is already running on Elisa's live network, with trials planned at BT.
SoftBank Sets a Date
The most tangible marker is a commercial AI radio network field trial with SoftBank in Japan scheduled for 2027. Under the agreement announced Tuesday, Nokia's anyRAN software will run on SoftBank's AITRAS platform using NVIDIA technology. A scheduled trial is not proof of a successful commercial rollout, but it does give investors a dated checkpoint between development and deployment.
What the market has yet to see is the step from technical capability to revenue. A product launch on its own won't support a durable re-rating; what counts is whether it produces robust applications and, after that, an economic contribution. The same logic applies to the balance sheet. Working capital ties up funds while restructuring consumes them, so even rising operating profit may leave limited room to maneuver if cash conversion weakens further. In the less favorable outcome, the new applications take longer to pay off while capital remains locked up.
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The Bull Case Holds — Conditionally
None of this erases the more optimistic reading. If the operating profit target stands and Nokia keeps advancing on commercialization, a higher capital outlay can reasonably be viewed as investment in future business rather than a warning sign. The condition is that Nokia meets its earnings goals and that the cash commitment doesn't become a permanent burden.
The two broker moves capture that conditional quality neatly. Inderes attaches a demanding earnings assumption to a recommendation that still leans negative; Handelsbanken extracts a buying opportunity from the same operating strength. Both see the profit. Only one is willing to pay for it today. What would settle the question is the combination investors have been waiting for — profit momentum paired with cash conversion that actually holds up.
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