Ericsson (Buy, TP: SEK76.00) - Not a top-line case
In the Q4 results, the positives were: 1) a resilient gross margin and cost control in light of weak sales; 2) the CS&S turnaround fueling the 6% adj. EBITA beat; and 3) strong FCF. These more than offset: 1) soft guidance; 2) low visibility of a market recovery; and 3) a slower AT&T ramp. We have cut our 2024e non-IFRS EPS by 6% but note that the shares closed +4% on the day, signalling investors starting to find a foothold on the earnings and FCF rebound potential for 2024. We reiterate our BUY but have cut our target price to SEK76 (78).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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