By Sam Boughedda
Raymond James analysts downgraded shares of Ericsson (NASDAQ:ERIC) to Market Perform from Outperform, removing the firm's price target on the stock.
They told investors in a research note that catalysts failed to turn the tide for the stock. The main catalysts the analyst refers to are Apple (NASDAQ:AAPL) IPR and DoJ provisions which "failed to sustainably catalyze the stock as worries regarding the observed market trends grew."
ERIC shares "barely responded to the Apple resolution," which led Raymond James' 2023 EPS estimates 15% higher. Meanwhile, the analysts explained that setting provisions with the DoJ reduced overhang and uncertainty, but ERIC shares "only rose briefly and sold off with the quarterly report."
"Increased concerns about weaker U.S. spending and the dilutive margin effects of the Indian sales have more than offset the positives," wrote the analysts.
"We believe inventory absorption by U.S. operators, which Ericsson noted at its Capital Markets Day, will weigh on results and sentiment," they added. "We see potential for improvement in 2H23 vs. 1H23, but deem this insufficient to recommend the shares given organic CC growth challenges and margin pressure."