Why did Ericsson move?
Written after the close on
Ericsson rose sharply as BlackRock raised its stake. Over the last five trading days Ericsson was roughly flat, holding up while the Stockholm market was also little changed, and it jumped in the latest session. The likely driver was BlackRock disclosing it had lifted its holding above the five percent threshold, a sign of institutional demand; a flaggningsmeddelande is simply a regulatory notice that an investor's stake has crossed a disclosure level. A four-year network modernization deal with a rural US carrier and the upcoming third-quarter report, due in mid-October, are also in the background, while a cautious broker view on telecom spending and margins has weighed on sentiment. Watch the mid-October report for how networks margins and North American revenue develop.
Earlier days
Ericsson slid as a downgrade hit the stock. Over the last five trading days Ericsson fell sharply, more than a clearly weaker Stockholm market, with the heaviest drop in the latest session. The likely driver was Morgan Stanley cutting its rating to underweight — meaning it expects the shares to lag the wider market — and lowering its profit and price-target estimates, pointing to cautious telecom operators, a flat radio access network market (the equipment linking phones to mobile networks) and rising component costs. That outweighed a positive item: a four-year modernization deal with Nex-Tech Wireless covering most of its rural Kansas network and adding a cloud-native 5G core. Watch the mid-October report, where network margins and North American sales will show whether that caution is justified.
Ericsson rose, recovering part of the week's decline. Over the last five trading days Ericsson fell clearly, in line with a broadly weaker Stockholm market, and the drop likely came after an analyst downgrade to underweight — meaning that firm now expects the shares to lag the market — on conservative operator spending on mobile networks and rising component costs, while a rival pushed a cheaper way to build mobile masts. The latest session's rebound was probably helped by the shares trading without the right to the dividend, which mechanically lowers the price, plus continued buybacks of its own stock and a large investor lifting its holding above the five percent disclosure threshold. Watch the mid-October report, where margins in the networks business and any sign of firmer operator budgets will matter most.
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History in plain words, not investment advice.