Ericsson (Buy, TP: SEK147.00) - De-risked, target price increased
We believe the reasons for the 9% hit to the Ericsson B shares on the Q2 report were: 1) some analysts and investors might not have been paying full attention to news coming out of China; and 2) ‘case fatigue’ relating to the turnaround in Digital Services. This reinforces our BUY recommendation as the 5G core domain cycle in particular is on the upswing, and contracts in the US, Malaysia, Europe and other parts of northeast Asia offset losses of lower-margin business in China. We have raised our 2022–2023e EPS by 1–2%, and our target price to SEK147 (145); we reiterate our BUY.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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