Nokia Corp. (NYSE: NOK) appears to be transitioning from a troubled cellphone maker back into a key communications and infrastructure company. It was just last week that we saw Oppenheimer opine that Nokia shares were at least 40% undervalued. Now we have a separate report in a new week that also sees great upside in Nokia shares as its turnaround takes hold — which put Nokia on our weekend coverage of analyst calls in stocks under $10 with massive upside.

Canaccord Genuity’s T. Michael Walkley and Siddharth Sinha have increased their Nokia price target (for New York ADSs that is) to $12 from $11 while maintaining their Buy rating. This matches the upside price target call from Oppenheimer last week.

The only difference is that Nokia shares were at $8.37 prior to Oppenheimer’s call, versus $8.64 prior to Canaccord Genuity’s call. Still, this is upside of about 39% to the new target — or 40% upside if you round up.

Walkley and Sinha said:

With our belief the Networks business is positioned for improving trends throughout the second half of 2014 combined with the longer-term potential for strong high margin licensing revenue and HERE sales growth, we believe Nokia shares represent an attractive long-term investment. We believe Nokia’s 2014 guidance for licensing revenue to reach an annual run rate of 600 million euro understates the long-term potential for this business now that Nokia no longer will need to cross license its own mobile device sales.

ALSO READ: Baird Sees Big Rotation From REITs and Utilities to Financials

The team is also positive on Nokia’s legal front and see near-term catalysts driving Nokia shares higher in a sum of the parts analysis. They said:

We believe the Samsung arbitration ruling in 2015 and new initiatives to monetize patents provide strong long-term high-margin growth potential. We also anticipate sustained strong margins in Networks and strong long-term growth from HERE. We view third quarter (2014) earnings and the November 14 analyst day in London as potential catalysts. … This sum of the parts analysis leads to a valuation of roughly 37.7 billion euro or roughly $49.0 billion euro, which results in our $12 per share price target.

Other key points for the $12 sum of the parts price target (actually $11.94):

• Expected sales growth returning to Networks — with double-digit operating margins
• Improved balance sheet and solid cash returns
• Assumed 1.1 times Networks 2015 sales estimate
• 15-times potential annual licensing revenue at end of 2015
• 3-times expected 2015 sales
• Anticipated net cash exiting 2015

Seeing an analyst team ratchet a price target up $1 doesn’t seem like much on the surface. The issue is that Nokia is deep in a turnaround, and this sum of the parts analyst call echoes much of last week’s Oppenheimer call. The consensus price target is listed as only being $9.02, and the $12.00 call is still matching the highest analyst price target. Suddenly this is becoming significant.

ALSO READ: High-Yielding MLPs On Sale After Oil and Gas Prices Tumble

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.