Ericsson

Q1 sales  stood at SEK 49.3 bn, slightly below the market expectations of SEK 50.9bn.

Adjusted gross profit amounted to SEK 23.7bn, compared to the expected 24.4bn, resulting in an adjusted gross margin of 48.1 percent. The company is facing higher input costs in semiconductors due to AI initiatives and probably higher memory prices.

Adjusted EBITA was SEK 5.6bn, against market expectations of SEK 5.8bn. EBITA margin came at 11.4 percent impacted by negative foreign exchange effects. 

EBITA stood at SEK 1.8 bn, with an EBITA margin of 3.7%, heavily impacted by restructuring costs of SEK -3.8 bn regarding workforce reductions in Sweden (higher than expected).

Q1 26 outlook - Sales growth in Q1 26 in Networks is expected to be broadly in line with average 3-year seasonality, and it is expected to be higher than the 3-year average seasonality in Cloud Software and Services.

FY 26 outlook - The company expects the RAN market to remain stable in FY 26.

Last 3 months has been very positive for Ericsson in terms of share price rise, so we expect a big negative reaction in the share price today.

As a crossread, we expect Nokia shares to be impacted as well.

Expert Opinion:
We indeed suspect profit-taking will occur after the strong rise in share price. Valuation is still OK ish but we fail to get truly enthusiastic about the company's risk reward profile now. 

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