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JPMorgan reinstates Nokia with overweight rating. Notes patent portfolio has huge monetization potential.

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JPMorgan has reinstated the new Nokia with overweight rating and has given a price target of €8 ($10.80). It believes that Nokia’s patent portfolio has huge monetization potential. JPMorgan’s analyst also noted that even if Nokia is able to take 1% royalty per licensee device, its next price target may reach €15.

He thinks that if Nokia were able to take in 1 percent royalty per device, the firm’s price target would easily move to €15. Deshpande commented, Nokia has a broad patent portfolio (ex NSN) of ~10k patent families comprising ~30k patents. Only ~10% of the patents are externally licensed & Nokia has built a large trove of implementation patents which are linked to its essential patents.

Seems, Nokia’s recent patent win against HTC has also played a role in this reinstatement. According to analyst Deshpande,

Nokia also recent won an injunction against handset maker HTC. Deshpande sees two points in this segment:

  1. Qualcomm’s (Nasdaq: QCOM) LTE chips contain Nokia IP; and
  2. While Qualcomm is a licensee, the right does not pass through to its customers. HTC would need to obtain its own license with Nokia.

Deshpande comments, Qualcomm sells over 700 million of these chips every year and once this case precedent has been set, Nokia can use it to claim royalties on that IP from many other infringing companies.

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