Ericsson (Buy, TP: SEK96.00) - Big earnings beat with FCF treat
Ericsson’s strong Q3 results ticked most of our BUY-case boxes and we continue to see the earnings momentum story build into the seasonally important Q4e, which offers the possibility of extraordinary capital distribution. Signs of market stabilisation, a rolling 12-month ROCE of 17.5%, and an adj. FCF margin of 14.9% could also attract a new investor base at an undemanding valuation. We reiterate our BUY and have raised our target price to SEK96 (85), having raised our above-consensus 2024–2025e adj. EBITA by 5–7%.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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