The Worst Is Behind Ericsson, Says Credit Suisse

Loading...
Loading...
Credit Suisse upgraded
Telefonaktiebolaget LM EricssonERIC
to Neutral from Underperform, saying the "worst is behind" the networking gears manufacturer.

"Our analysis of capex trends at leading operators in key regions suggest that while demand remains weak, capex declines will start to moderate from 2H16 (except China). As such, we believe the worst is behind us both in terms of revenues and business mix," analyst Achal Sultania wrote in a note.

Further, Sultania expects the recent ramp up in cost cutting efforts should lead to a gradual improvement in EBIT margins for the company over the next 12–18 months.

Related Link: Ericsson Announces Multi-Year Contract With MLB Network For Real-Time Sports Graphics Software

In addition, the analyst also termed Ericsson's revised opex guidance of SKr53 billion annualized from 2H17 (versus the previous guidance of SKr58.5 billion and 2014 level of SKr63 billion) is a "step in the right direction."

"While we may not see any material EBIT improvement in 2H16, we believe cost cutting and gradual mix improvement should allow for 10 percent EBITA margins in 2017 (vs. 8.4 percent we assume for 2016)," Sultania highlighted.

Shares of Ericsson closed Friday's regular trading session at $6.93. The analyst marginally cut the price target to $6.40 from $6.43.

Full ratings data available on Benzinga Pro.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!
Loading...
Loading...
date
ticker
name
Price Target
Upside/Downside
Recommendation
Firm
Posted In: Analyst ColorUpgradesPrice TargetAnalyst RatingsTechAchal SultaniaCredit Suisse
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...