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Investing.com - CFRA has reduced its price target on Ericsson (NASDAQ:ERIC) to $8.00 from $9.00 while maintaining a Hold rating on the telecommunications equipment provider. According to InvestingPro data, the stock’s RSI suggests oversold territory, while the company maintains an impressive 21-year streak of consecutive dividend payments.
The adjustment applies an EV/EBITDA multiple of 6.0x to CFRA’s 2025 EPS estimate, in line with Ericsson’s three-year average forward EV/EBITDA, while the firm’s EPS forecasts remain unchanged.
Ericsson reported second-quarter 2025 net profit of SEK4.6 billion, compared to a loss of SEK11.0 billion in the same period last year, exceeding the S&P Capital IQ consensus estimate of SEK4.4 billion.
The Swedish telecom equipment maker’s performance was bolstered by sales growth in North America and ongoing cost-cutting initiatives, though U.S. tariffs limited profit margin expansion.
CFRA views Ericsson’s strategic developments positively, including signing all three operators in Japan for its joint venture Aduna and investments in AI and 5G stand-alone networks, but remains cautious due to macroeconomic pressures and global trade dynamics affecting revenue visibility.
In other recent news, Ericsson’s second-quarter 2025 financial results revealed a mixed performance. The company reported a sales miss but managed to exceed earnings expectations, primarily due to one-time factors that bolstered its Intellectual Property Rights revenue. Despite these results, Raymond (NSE:RYMD) James maintained a Market Perform rating on Ericsson, expressing concerns over the quality of the earnings beat. The firm highlighted that foreign exchange headwinds had a more significant impact on sales than anticipated. Additionally, Raymond James noted increased caution regarding Ericsson’s Radio Access Network outlook, citing challenges such as tougher comparisons at AT&T and slowing trends in India. The report also mentioned that Ericsson’s cost-cutting measures could offer some relief, though significant margin improvements are unlikely without increased operating leverage. Looking ahead, Ericsson anticipates below-seasonal growth in the third quarter of 2025, with factors like Nokia (HE:NOKIA) swaps at AT&T and normalized IPR expected to pressure margins. The ongoing struggle with 5G monetization and the uncertain financial implications of the API joint venture add to the challenges faced by the company.
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