From Investing.com: 2025-01-18 04:30:00

Bernstein predicts a tough road ahead for Ericsson in 2025 due to demand uncertainty and competition, reiterating an “Underperform” rating with a price target of SEK 74. The telecom sector faces challenges with weak capital expenditure trends and slowing data usage growth, potentially leading to a demand downturn.

Ericsson’s lack of visibility and recent market downgrades raise concerns about its key revenue driver, the mobile RAN market. Although Q3 2024 revenue gains from AT&T were positive, caution is advised as management tempers expectations for Q4 2024. Investors should wait for more clarity on Ericsson’s FY25 outlook.

Nokia, Ericsson’s competitor, is rated “Market Perform” with a target price of €4.65. Nokia’s diversified exposure to fixed-line and optical networking, along with the pending acquisition of Infinera, may offer some benefits. The industry faces pressure from Chinese vendors despite concerns raised by Western governments about security and sanctions.

Investors are advised to prepare for further turbulence in the telecom equipment industry. While AI-driven data center investments may present opportunities, they are unlikely to offset the structural challenges in mobile networking. The sector’s outlook remains uncertain, with the potential for deeper declines in 2024 impacting the future demand for equipment.



Read more at Investing.com: Why you should avoid Ericsson stock in 2025, Bernstein By Investing.com