On Friday, Citi reiterated its neutral stance on Ericsson (BS:ERICAs) (ERICB:SS) (NASDAQ: ERIC), maintaining a price target of SEK60.00. The firm's analyst pointed to a negative Catalyst Watch ahead of Ericsson's first-quarter results, which are scheduled to be released on April 16, 2024, at 6 am UK time.
The forecast is based on expectations of a downturn in the market, particularly noting a significant slowdown in India, coupled with a lower than typical operational expenditure decrease, which may result in first-quarter EBITA falling short of the consensus.
The analyst acknowledged that Ericsson is expanding its market share, especially in the United States through a partnership with AT&T in the second half of 2024. Despite this gain, the anticipated overall negative trends in the end market are expected to overshadow the benefits of market share growth. The firm's projections for Ericsson in 2024 remain below the consensus due to these factors.
Citi has expressed concerns that the upcoming quarterly results could lead to further downward revisions in estimates. The analyst's remarks underscore the expectation that the less-than-favorable end market trends will likely have a significant impact on Ericsson's financial performance in the first quarter of 2024.
InvestingPro Insights
As investors prepare for Ericsson's upcoming earnings report, a glance at real-time data from InvestingPro offers some additional context. Currently, Ericsson holds a market capitalization of $16.85 billion, reflecting its significant presence in the communications equipment industry. Despite recent challenges, the company boasts a strong record of dividend payments, having maintained them for 20 consecutive years and even raising them for the last four years. This commitment to shareholder returns is evident in their dividend yield of 3.31% as of the latest data.
Analysts tracking Ericsson have revised their earnings expectations downwards for the upcoming period, suggesting that the market's concerns are not unfounded. However, the company's stock is known to trade with low price volatility, which could be a point of consideration for risk-averse investors. Moreover, Ericsson's moderate level of debt and the analysts' prediction that the company will return to profitability this year provide a counterbalance to the immediate concerns.
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