Shares of Nokia (NYSE:NOK) gained 23.4% in the first half of 2018, according to data from S&P Global Market Intelligence. The Finnish telecom infrastructure and equipment specialist has been talking up its full-year and longer-term prospects all year long, to market-moving effect.
February's fourth-quarter report edged out Wall Street's estimates across the board. Management also provided a bullish slate of full-year guidance targets for 2018, built around the upcoming wave of telecoms around the world planning to install 5G wireless networks. Share prices jumped as much as 21% higher that day.
Nokia's first quarter saw revenue and earnings plunging due to weakness in the networks division, but the stock surged anyway thanks to some calming words from CEO Rajeev Suri. Yes, first-quarter results were weak, but that should be a temporary speed bump.
"We have clear visibility to 5G deals for large-scale commercial rollouts in United States in the second half of the year; and are successfully executing our diversification strategy, with consistent double-digit profitable growth with enterprise and webscale customers," Suri said. Nokia also reiterated its full-year guidance targets, noting that the incoming 5G catalyst should accelerate Nokia's sales and profits in the year 2020 and beyond.
Finally, Nokia's surging stock enjoyed another tailwind in May, when Chinese rival ZTE was forced to close down. Removing an entire rival from the sharply contested network equipment market can only be good news for surviving sector peers.
ZTE has since been given a lifeline by American regulators and sketched out a new strategy under new leadership. At the same time, the larger 5G story is unchanged and should provide plenty of fuel for Nokia's growth ambitions over the next several years. Investors are bullish on this stock for good reason right now.