On Jan 3, Zacks Investment Research upgraded Ericsson (ERIC) to a Zacks Rank #2 (Buy). This is based on the company’s ongoing contracts spree to boost its 4G/ Long-Term Evolution ('LTE') technologies in emerging markets across the world. In addition, the spate of 2G/3G network enhancement deals of Ericsson added to the bliss.
Why the Upgrade?
Ericsson is the world’s largest supplier of LTE technology with a significant market share and has established a large number of LTE networks worldwide. The company has been benefiting from the rising demand of 4G/ LTE technologies in growing regions like China, India, Hong-Kong and the Middle-East.
Most recently, Ericsson was selected as the exclusive supplier of advanced converged LTE FDD/TDD and Evolved Packet Core network capabilities by China Mobile Hong Kong (read more: Ericsson to Enhance China Mobile Hong Kong's Network). Also, Ericsson joined hands with SingTel for the ground-breaking trial of its Radio Dot System to enhance the local operators’ LTE and 3G network coverage in Singapore.
Further, with the emergence of the Smartphone market and subsequent usage of mobile broadband, the user demand for coverage speed and quality has increased in recent times. Ericsson is tapping this opportunity by offering efficient and reliable solutions for network upgrades to telecom companies across the globe.
Late last month, the company extended its managed services alliance with Yoigo for enhancing the latter’s customer experience through better 2G, 3G, HSPA and 4G services (read more: Ericsson-Yoigo Extend Alliance to Boost Spanish Network). Such deals promise strong growth prospects for the company.
Over the last seven days, the Zacks Consensus Estimate for 2014 and 2015 remained flat at 65 cents and 77 cents, respectively. Also, the long-term expected EPS growth for Ericsson is 12.2%.
Other Stocks to Consider
Other better-ranked companies in the industry include Aruba Networks, Inc. (ARUN), ViaSat Inc. (VSAT) and Mitel Networks Corporation (MITL). While Aruba Networks and ViaSat sport a Zacks Rank #1 (Strong Buy), Mitel Networks carries the same rank as Ericsson.
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