Ericsson Minor model adjustments
Ahead of Ericsson’s Q2 results (due at 07.00 CET on 12 July), we have lowered our 2024–2025e adj. EPS by 4–6%, factoring in FX headwinds while our underlying estimates are unchanged. We do not consider these changes to be material and have not changed our BUY recommendation. However, we have raised our target price to 72 (70), applying a 9x multiple to our 2024–2025e EV/EBIT. We are 3–9% above post-Q1 Infront consensus for Q2e and 2024e adj. EBITA, and 40% above for 2024e FCF. We see the Q2 results as a potential de-risking event ahead of mix-driven earnings and an expected FCF rebound that should trigger a re-rating in H2e. We note recent supportive insider activity.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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