Telefonaktiebolaget LM Ericsson (publ) (ERIC) Stock Is Bruised, But Is It Still a Buy?

Despite closing 0.15 points higher on 12 February, Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC) remains a key investment for many, but the stock is also a popular trading vehicle. Here’s how to trade it using charts and trading levels Wednesday. The shares accumulated 1.69 percent at $9.04 with a light trade volume of 3.99 million shares. After opening the session at $9.01, the shares went as high as $9.075 and as low as $9, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $29.9 billion and now has 3.3 billion shares outstanding. Telefonaktiebolaget LM Ericsson (publ) (ERIC) stock has gained 5.98 percent of market value in 21 trading days.

ERIC stock has a trailing 3-year beta of 0.52, 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 -$0.21 a share in the trailing twelve months. The stock’s value has surged 1.92 percent year to date (YTD) against a rise of 41.47 percent in 12 month’s time. The company’s shares still trade -4.34 percent away from its 1-year high of $9.45 and 50.67 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.

Telefonaktiebolaget LM Ericsson (publ) (ERIC) will probably climb 8.19 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $11.08 price as 12-month high target. This represents a whopping 22.57 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $9.39, which represents a return potential of 3.87 percent when compared to the closing price of the stock of $9.04 on Tuesday, February 12. The lowest price target for the stock is $5.71 — slightly more than -36.84 percent from ERIC’s current share price.

History has shown that shares in Telefonaktiebolaget LM Ericsson (publ) have gone down on 15 different earnings reaction days and are predicted to add 0.06 percent when the company reports upcoming earnings. Investors will get their next glimpse of ERIC’s Q1 earnings on April 17. Analysts are forecasting revenue to climb 5 percent to $5.34B in the fiscal first quarter, while earnings are seen soaring by nearly 400 percent to $0.05 per share. It earned -$0.05 per share, worse than the $0.14, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $7.21B, better than the $6.83B analysts expected. Earnings are estimated to increase by 263.6 percent this year, 19.28 percent next year and continue to increase by 0 percent annually for the next 5 years.

The stock is currently hovering around the first support level of $9. Below this, the next support is placed in the zone of $8.97. Till the time, the ERIC stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 56.78 on daily chart, which may remain a cause for concern. If the price breaks below $8.97 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $9.07 mark may result into a pull-back move towards $9.11 level.

Further, it is sporting a 1.31 on the Price-to-Sales ratio. Compare this with the industry average P/S of 1.79. 35.2 percent is the gross profit margin for Telefonaktiebolaget LM Ericsson (publ) and operating margin sits at -10.9 percent. Along with this, the net profit margin is -11.7 percent.