On Jul 5, Zacks Investment Research upgraded
) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Strong demand for upgradation to 4G/LTE technologies by
leading telecom companies across the world, higher mobile
broadband traffic owing to the increased adoption of Smartphones,
focus on strengthening its potential through improved operational
efficiencies and series of strategic acquisitions are the rank
drivers for this stock. The long-term fundamentals for the
industry to improve remain very encouraging.
The demand for LTE networks is growing each day as this
technology enables easy and convenient communication by providing
high-speed data for mobile phones and data terminals. Currently,
Ericsson has established about 150 LTE networks worldwide and is
receiving contracts from leading telecom operators such as
Swisscom, Mobile Telesystems, Reliance Communications and Bharati
Airtel to name a few. In addition, the company had an
earnings surprise of 50.0% in the latest reported quarter.
On Apr 24, 2013,
reported a non-IFRS net income (excluding amortizations,
write-downs of acquired intangible assets and restructuring
costs) of 15 cents or SEK 0.99 per share in the first quarter of
2013, beating the Zacks Consensus Estimate of 10 cents.
Revenues in the quarter were SEK 52 billion ($8.08 billion),
up 7% year over year. However, it decreased 19% sequentially for
comparable units and adjusted for foreign exchange impacts. The
Zacks Consensus Estimate for revenues was $7.8 billion for the
quarter. Consolidated revenues during the quarter were primarily
driven by higher revenues across Networks and rollout services,
especially from high value project activities centered in Europe
and North America. Geographically, North American segment
reported a 23% growth, while North East Asia experienced a tough
quarter with reduced sales in South Korea and adverse foreign
exchange effects in Japan.
On the heels of the strong first quarter results, earnings
estimates have been trending higher in the past 90 days. The
Zacks Consensus Estimate for fiscal 2013 climbed 2.7% to 77 cents
per share. This represents year-over-year growth of 37.2%.
The Zacks Consensus Estimate for fiscal 2014 increased 6.0% to
88 cents per share over the same time frame, reflecting a
year-over-year increase of 14.1%.
Other Stocks to Consider
Apart from Ericsson, other stocks in the communications
equipment and networking solutions sector that are currently
performing well include Ubiquitous Networks Inc. (
), having a Zacks Rank #1 (Strong Buy). Mitel Networks
) and Motorola Solutions Inc. (
) are also worth considering and carry a Zacks Rank #2
ERICSSON LM ADR (ERIC): Free Stock Analysis
MITEL NETWORKS (MITL): Free Stock Analysis
MOTOROLA SOLUTN (MSI): Free Stock Analysis
UBIQUITI NETWRK (UBNT): Free Stock Analysis
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