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Telefonaktiebolaget L M Ericsson ERIC

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Ericsson’s Q1 Showcases Margin Improvements With Strong Deal Pipeline; Raising FVE to SEK 110

Mark Cash Senior Equity Analyst

Analyst Note

| Mark Cash |

We are raising our fair value estimate for no-moat Ericsson to SEK 110 from SEK 105 because we’re more confident that 5G networks will lead to a longer period of growth and that cost-extraction efforts have made the company’s margin profile more sustainable. We consider shares slightly overvalued. While we expect service providers to continue to multisource vendors, limiting the total opportunity, Ericsson is gaining precious share as 5G rolls out globally. Previous restructuring actions and development costs are increasing gross and operating margin profiles that we believe Ericsson can sustain over the 5G rollout period.

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Company Profile

Business Description

Ericsson is leading supplier within the telecommunications equipment sector. The company's three major operating segments are networks, digital services, and managed services. Ericsson sells hardware, software, and services primarily to communication service providers while licensing patents to handset manufacturers. The Stockholm, Sweden-based company derives sales worldwide and had 95,000 employees as of June.

Contact
Torshamnsgatan 21, Kista
Stockholm, SE-164 83, Sweden
T +46 107190000
Sector Technology
Industry Communication Equipment
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2021
Stock Type —
Employees 101,113

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