Morgan Stanley prefers Nokia as it turns bearish on Ericsson
Morgan Stanley downgraded Ericsson to underweight, cutting price targets to SEK90 and $9, citing falling North American revenues and margin pressures. The bank expects flat market growth and declining margins through 2028, preferring Nokia. Ericsson shares fell over 3%.
How this was made
The 30-second read
Why it matters
The downgrade and target cut are likely to trigger short‑term selling pressure on Ericsson and may prompt a sector rotation away from telecom equipment stocks.
Market read
Analyst downgrade with price target reduction is a fresh catalyst that can move Ericsson's share price and influence sector sentiment.
What to watch
Rising semiconductor costs could also impact competitors, and any upside from cost‑cutting initiatives is not reflected in the downgrade.
Background
Morgan Stanley's bearish outlook follows weaker North American revenue and rising chip costs for Ericsson, with a flat capex outlook for the sector.
Ticker impact
Morgan Stanley downgraded Ericsson to underweight and cut its price target to $9 from $11, causing the stock to slide over 3%.
Potential further decline as investors reassess margins and growth outlook.
Downgrade is a fresh, material analyst action with a concrete price target change; such moves typically trigger sell pressure.
Market effects
The downgrade signals broader margin pressure for telecom equipment vendors, potentially affecting peers like Nokia and other hardware makers.
North American telecom operators' slowing spend may weigh on related US-listed telecom stocks.
Highlights a sector-wide slowdown in mobile network capex through 2027.
Counterpoint
If Ericsson can stabilize margins and secure new contracts, the downgrade may be overblown.
Key entities
- AnalystMorgan Stanley
Equity research firm issuing the downgrade.
- CompanyEricsson
Swedish telecom equipment maker whose stock is downgraded.
