Sweden-based Telefonaktiebolaget LM Ericsson (DE:ERCA) (DE:ERCB) today reported its Q3 results and exceeded analyst expectations, driven by a rebound in North American demand. The company posted an adjusted EBIT (earnings before interest and tax) of SEK7.3 billion against the average analyst forecast of SEK5.75 billion, cited by Reuters.
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Meanwhile, Ericsson’s net sales for the quarter fell 4% year-over-year to SEK61.8 billion. Sales were down by just 1% on an underlying basis. Nonetheless, it still beat the analyst forecast of SEK61.6 billion by a slight margin. Ericsson shares in Germany gained 0.74% as of writing.
Ericsson is a multinational group, offering a wide range of services to communications service providers.
Ericsson Signals Demand Revival in North America
Ericsson’s third-quarter numbers were mainly driven by its performance in North America. The company noted that the market is exhibiting signs of revival in demand for its 5G equipment in the region. The company’s sales in North America increased by 51% year-over-year to SEK20.4 billion in Q3. One key factor behind the growth in North America was the increase in sales to AT&T (T), following the $14 billion, five-year agreement made last year.
The growth in North America was offset by a decline in most of Ericsson’s other markets. The company’s sales in Southeast Asia, Oceania, and India fell 43% year-over-year. Meanwhile, the Middle East and Africa business declined 22%.
Ericsson Secures Major 5G Deal with Bharti Airtel
Ericsson has reportedly secured a multi-billion dollar deal with Indian telecom giant Bharti Airtel to supply 5G equipment, according to Reuters. Before this, the company signed a similar contract with Vodafone Idea in India last month.
Ericsson’s performance in India has suffered a significant slowdown despite the region still being a bright spot for the company. With these new contracts, the company aims to boost its revenue next year, recovering from a substantial decline in contracts from India in the first half of the year.
Is Ericsson Stock a Good Buy?
According to TipRanks, ERCB stock has received a Moderate Sell rating based on four Hold and two Sell recommendations. The Ericsson share price target is €5.72, which is 17% below the current trading level.
