Ericsson gets reviewed by four brokers after Q4 '09 figures

26 January 2010 - Four brokers have lowered their share price targets, while one has raised its target on Ericsson AB (STO: ERIC B) after the Swedish telecoms equipment maker yesterday posted a lower-than-expected profit for the fourth quarter of 2009.

Today, Ericsson's target was lifted by Morgan Stanley to SEK57 from SEK56 due to a strong net cash position. However, the rating on the stock is still "underweight".

The broker has only made slight changes in its other estimates for the company after the fourth-quarter report.

Ericsson has underperformed the market's expectation four times in a row now. Excluding joint ventures, the company currently trades at a P/E ratio of 14 based on the 2010 estimates and its valuation is still unattractive, according to Morgan Stanley.

DnB NOR has maintained its "sell" rating on Ericsson and has cut the target to SEK55 from SEK60.

According to the broker, the company will have difficulties combining its two top priorities -- to grow faster than the market and to show good financial development.

Among others, DnB NOR was disappointed with the single-digit margin of Ericsson's Professional Services unit.

The target of the telecoms equipment maker was also trimmed by Goldman Sachs, to SEK92 from SEK95, and by UBS, to SEK72 from SEK75. The brokers have reaffirmed their ratings at "buy" and "neutral", respectively.

S&P Equity Research has downgraded its target on Ericsson to SEK82 from SEK86, but has maintained its "buy" recommendation.

The broker has also cut its estimates for the company's revenue in 2010 and 2011.

Ericsson saw its net profit plunge to SEK314m in the fourth quarter of 2009 from SEK3.9bn a year earlier, undershooting the SEK2.8bn consensus estimate in an analyst poll by SME Direkt. The company's sales dropped 13% to SEK58.3bn, versus the average forecast for SEK60.1bn.

By 09:06 CET on Tuesday, the B-series share in Ericsson was down 1.55% to SEK70 on the OMX Nordic Exchange in Stockholm.

(EUR1 = SEK10.3)

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Source: http://www.tradingmarkets.com/news/stock-alert/ericy_ericsson-gets-reviewed-by-four-brokers-after-q4-09-figures-726994.html