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n900Has Nokia (NOK) finally come up with a smart phone that can take on the Apple (AAPL) iPhone?

Thursday morning, the company launched a new model called the N900 which is based on the company’s Linux-based Maemo 5 operating system. Not everyone is going to be convinced, but Davenport & Co. analyst F. Drake Johnstone is. Late Thursday afternoon, he raised his rating on Nokia to Buy from Hold, setting a price target of $18.

He says the N900 gives the company “good potential to complete effectively in the smart phone market against Apple, Research in Motion (RIMM) and new handsets powered by Google’s (GOOG) Android operating system.” Certainly, it has impressive specs: touch screen, slide-out keyboard, 5 MP camera, GPS, Mozilla browser, up to 48 GB of storage. The N900 can run up to 12 applications at once; it runs Adobe (ADBE) Flash, which the iPhone doesn’t. Johnstone concedes that Apple has the edge in the near-term, in particular given 65,000 choices in the App Store. But he thinks that over the 12-18 months, “Nokia could generate significant consumer and corporate demand” for Maemo-based phones, “which should motivate software developers to create new software applications for these devices.”

Johnstone sees 2010 GAAP EPS of $1.22 a share, above the Street at $1.06, based on his view that “greater demand for Nokia’s new high-end smart phones should help to stabilize the average sellsing price of Nokia’s handsets.”

In Thursday’s trading, NOK rose 50 cents, or 3.8%, to $13.63.

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Source: Has Nokia Developed an iPhone Contender?