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In May 2024, Investing.com’s Fair Value analysis identified a significant mispricing in Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC) shares, presenting an compelling opportunity for investors. The proprietary model, which combines multiple valuation methodologies to determine intrinsic value, indicated a 48% upside potential when the stock was trading at $5.08. For investors seeking similar opportunities today, our Most undervalued list showcases stocks with significant upside potential.
Ericsson, a global leader in telecommunications equipment and services, was experiencing a challenging period when our Fair Value model flagged the opportunity. Despite negative earnings per share of -$0.71 and mixed price performance in early 2024, the company’s robust revenue base of $23.8 billion and steady EBITDA of $2.2 billion suggested underlying strength in the business.
The subsequent performance has validated our analysis, with the stock climbing to $8.24, delivering a remarkable 63% return over 16 months. This appreciation was supported by fundamental improvements, including a shift to positive earnings per share of $0.55 and revenue growth to $26 billion. Recent quarters have shown particular strength, with Q2 2025 featuring margin improvements and strong North American sales performance.
Our Fair Value methodology proved especially accurate in this case, with the stock reaching its initial target price of $8.27. The analysis incorporated multiple valuation approaches, including discounted cash flow models, peer comparisons, and analyst consensus targets, while considering the company’s market position and growth prospects.
Recent developments have continued to support the investment thesis, including a successful patent dispute settlement and improved operational efficiency. While the company faced some challenges, such as a Vonage impairment charge, the overall trajectory has remained positive, with current Fair Value estimates suggesting further upside potential to $10.58.
The success of this Fair Value call demonstrates the power of combining comprehensive fundamental analysis with sophisticated valuation methodologies. InvestingPro subscribers gain access to these valuable insights, along with real-time Fair Value updates, detailed financial health scores, and professional-grade analysis tools to identify similar opportunities across global markets.