INFN - Nokia: Infinera Deal Isn't A Catalyst

2024-06-28 16:09:24 ET

Summary

• Nokia, struggling to generate growth in a tough telecom equipment market, has acquired Infinera in a deal that doesn't move the needle.
• The optical networking market is only targeted at 5% CAGR, missing out on the booming demand in the AI and data center space.
• The stock trades at nearly 10x EPS targets with no forecasted growth and the business reliant on merger synergies to boost the 2027 EPS.

Due to a tough telecommunications market, Nokia ( NOK ) has struggled for a decade to generate the growth to warrant higher stock prices. The telecom equipment company just announced a deal to acquire Infinera Corporation ( INFN ) in a deal that doesn't really move the needle. My investment thesis remains generally Neutral on the stock following the deal. ...

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