Ericsson LM (ERICb.ST): Steady quarter as revenue miss offset by cost management, component cost pressure building

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Ericsson LM (ERICb.ST): Steady quarter as revenue miss offset by cost management, component cost pressure building

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14 Jul 2026 02:09:06 ET │ 14 pages

Ericsson LM (ERICb.ST)

Steady quarter as revenue miss offset by cost management, component

cost pressure building

CITI'S TAKE Neutral

Price (13 Jul 26 17:30) SKr112.75 Ericsson reported in-line results, with a slight miss at the top line offset by

Target price SKr110.00 consistently strong cost control. Sales were flattish y/y excluding last

year's IPR settlement and missed expectations, although there was a Expected share price return -2.4%

phasing issue with deal slippage from 2Q into 3Q leading to stronger- Expected dividend yield 2.4%

than-average seasonality in Networks revenue for 3Q. Networks gross Expected total return 0.0%

margins were resilient in 2Q, but Ericsson continues to flag coming Market Cap SKr379,976M

component cost headwinds, which should build over 2H26 and into 2027. US$39,193M

3Q Networks gross margin guidance of 48-50% is lower than consensus

at nearly 50%, but more of this is down to phasing/mix (higher network

rollout in 3Q) than component cost pressure. The latter is something

Ericsson are anticipating keeps building and they are working hard to Andrew M. Gardiner, CFAAC

offset, both via internal cost efforts but more importantly price +44-20-7986-4206

renegotiations with customers. We view today's results and outlook as andrew.gardiner@citi.com

fairly benign, with multiple, albeit small, moving pieces. Pavan Daswani, CFA

+44-20-7986-6889

Implications — We view Ericsson's 2Q results and 3Q outlook as largely in line, with pavan.daswani@citi.com

the 2Q Networks revenue miss due to phasing and resulting in the therefore stronger

3Q outlook.