Ericsson (Buy, TP: SEK70.00) - Rebound case pushed back
The steep slowdown in India deployments, postponed recovery in the US profit centre, another round of layoffs, and a new CFO leaves our Q1e adjusted EBITA 13% below post-Q4 Infront consensus and raises the risk of another reduction in consensus EPS. We reiterate our BUY but have cut our target price to SEK70 (76), having lowered our 2024–2025e EPS by 7–5% as we still see an attractive risk/reward story for H2e, with the share price reflecting much negative news (close to five-year lows) on positive mix-driven earnings and an FCF rebound providing valuation support at a 2024e EV/EBITA of 5.7x.Ericsson provides communications technology and services. Co.'s services, software and infrastructure – especially in mobility, broadband and the cloud – enable the telecom industry and other sectors to do business, increase efficiency, improve the user experience and capture new opportunities. Co. has more than 110,000 professionals and customers in more than 180 countries. Co. provides support for networks with more than 2.5 billion subscribers. Co.'s core business areas are called Radio, Core and Transmission and Telecom Services. Co. divides its operations into three business segments: Networks, Global Services and Support Solutions.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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