Nokia (NOK) At 52-Week High On Dispute Settlement With Apple

Shares of Finland-based Nokia (HE:NOKIA) Corporation (NYSE:NOK) hit a 52-week high of $6.65 during the course of the trading session on May 23, before retracing a bit to close the session at $6.54, up 5.3%, over the previous day’s closing price.

What Led to the Surge?

The catalyst behind the increase in stock price was the settlement of a patent dispute with Apple Inc. (NASDAQ:AAPL) . Both the companies, who had been embroiled in a bitter tussle since late last year, settled all dispute and inked a new licensing deal.

Even though financial details regarding the multi-year agreement have not been revealed yet, the companies stated that Nokia will get an up-front payment in cash from the Cupertino, California-based company. In fact, it will get additional revenues during the tenure of the deal which is expected to be recognized from the second quarter of 2017.

Nokia has also agreed to provide certain products and services pertaining to network infrastructure to Apple. Moreover, Apple will resume having some Nokia digital health offerings (formerly under the Withings brand; Withings S.A. was acquired by Nokia last year) in its retail and online stores, going forward. The companies also said that they are looking to explore future partnership in the field of digital. Notably, the companies also intend to hold regular meetings in order to serve their customers in a better way.

Price Performance

Shares of Nokia have performed well in the last three months, outperforming the Zacks categorized Wireless Equipment industry in the period. The stock rallied 25.9%, while the industry gained only 5.8%.

We believe, the resolution of the legal dispute with Apple might boost the stock further.

The Dispute

We remind investors that in Dec 2016, Nokia had announced that it sued Apple for patent infringement after failure of several years of negotiation. The complaints against Apple were filed in multiple countries. Per Nokia, Apple declined its offers for licensing the patented inventions of the former that are used in several products of the latter.

The company further stated that, Apple had last agreed to a license covering certain patents from portfolio of Nokia Technologies in 2011. The action related to 32 patents covering features such as user interface, antenna, software, video coding, display and chipsets. (Read more: Nokia Sues Apple for Patent Infringement in Europe & US). The resolution of the dispute has removed a major overhang on Nokia’s shares.

Zacks Rank & Stocks to Consider

Nokia carries a Zacks Rank #3 (Hold). Better-ranked stocks in the Wireless Equipment space include Motorola Solutions (NYSE:MSI) and Ubiquiti Networks (NASDAQ:UBNT) carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Motorola has an impressive earnings per share track record having outshined the Zacks Consensus Estimate in each of the last four quarters. The average beat was 16.62%.

Ubiquiti Networks has an impressive earnings per share track record having outshined the Zacks Consensus Estimate in each of the last four quarters. The average beat was 13.33%.

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