Spotting Telefonaktiebolaget LM Ericsson (publ) (ERIC)’s Trend Before It Is Obvious To All

Analysts at Raymond James upped their rating on shares of Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC) from Underperform to Mkt Perform in their opinion released on December 20. Argus analysts bumped their recommendation on ERIC stock from Hold to Buy in a separate flash note to investors on October 19. Analysts at Credit Suisse issued an upgrade from Underperform to Neutral for the stock, in a research note that dated back to September 19.

The number of Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC) shares shorted has fallen by 5,090,136 shares. When looking at a stock for a potential investment, you want to know what percentage of Wall Street is betting against you. That’s what short interest tells you. The most recent short interest data has been released for the December 31st settlement date, which shows a decrease in total short interest for ERIC, to 10,874,626, a retreat of 31.88% since December 14th. Average daily volume for Telefonaktiebolaget LM Ericsson (publ) at the December 31st settlement plunged to 6,362,418, as compared to 7,071,233 at the December 14th report. That brought days to cover to 1.709197, a 24.29% decrease from the 2.257706 days to cover recorded at the prior short interest data release. Looking at the experts’ opinion for the ERIC stock we see that the average analyst recommendations at 2.6 suggests buying these shares.

By watching the trading activity of corporate insiders, it will become easier to get a sense of Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC)’s prospects.

Telefonaktiebolaget LM Ericsson (publ) (ERIC) is expected to jump by 13.01 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $11.07-month high price target. This represents a whopping 29.78 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $9.01, which represents a return potential of 5.63 percent when compared to the closing price of the stock of $8.53 on Friday, January 11. The lowest price target for the stock is $5.78 — slightly more than -32.24 percent from ERIC’s current share price.

The shares are currently floating around the first support level of $8.48. Below this, the next support is placed in the zone of $8.42. Till the time, the ERIC stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 45.91 on daily chart, which may remain a cause for concern. If the price breaks below $8.42 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $8.62 mark may result into a pull-back move towards $8.71 level.

ERIC shares dropped -0.29 points or -3.29 percent on Friday to $8.53 with a light trade volume of 5.738 million shares. After opening the session at $8.64, the shares went as high as $8.655 and as low as $8.51, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $29.5 billion and now has 3.45 billion shares outstanding. Telefonaktiebolaget LM Ericsson (publ) (ERIC) stock has lost -2.96 percent of market value in 21 trading days.

ERIC stock has a trailing 3-year beta of 0.57, offering the possibility of a lower rate of return, but also posing less risk. The portion of a company’s profit allocated to each outstanding share of common stock was -$0.63 a share in the trailing twelve months. The stock’s value has fallen -3.83 percent year to date (YTD) against a rise of 25.63 percent in 12 month’s time. The company’s shares still trade -9.74 percent away from its 1-year high of $9.45 and 42.17 percent up from 52-week low of $6.00. The average consensus rating on the company is 2.6, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a sell.

Shares of Telefonaktiebolaget LM Ericsson (publ) (ERIC) are trading at a P/E ratio of 0 times earnings reported for the past 12 months. The industry ERIC operates in has an average P/E of 12.45. Its P/E ratio went as low as 19.66X and as high as 102.2 over the 5-year span. Further, it is sporting a 1.28 on the Price-to-Sales ratio. Compare this with the industry average P/S of 3.35. 33.3 percent is the gross profit margin for Telefonaktiebolaget LM Ericsson (publ) and operating margin sits at -7.9 percent. Along with this, the net profit margin is -9 percent.