Ericsson Earnings: Recovery in North America Underpins Excellent Q3 Results

Ericsson’s third-quarter sales and profits were much better than we anticipated, mostly because of a massive rebound in the crucial North American market. Overall, global wireless network spending remains depressed, but we still believe most markets require significantly more carrier spending on 5G networks. Though carrier investment should continue going through peak-and-trough cycles, we still believe Ericsson will be a main beneficiary, despite the lack of a moat we see for the firm. We are raising our fair value estimate to SEK 95 from SEK 92 to reflect the strong quarter, but our long-term outlook remains the same.