Ericsson AB fell to its lowest level in almost a month in Stockholm trading after Nordea Bank AB cut its earnings estimate for the world’s largest maker of mobile networks and advised clients to sell the shares.
The stock slumped as much as 2.2 percent to 74.1 kronor, its lowest price since June 25. It traded 0.8 percent lower as of 10:23 a.m. local time, with trading volume at 38 percent of the daily average in the past three months.
Nordea cut its recommendation on Ericsson shares to sell from hold today after lowering its earnings per share estimates for 2013 to 2015 by 13 percent to 14 percent. The bank said it sees “limited support” above its new share-price estimate of 72 kronor, which it reduced from 84 kronor.
“Key triggers in the second half are likely negative and we fall far below consensus after significant estimate cuts,” Daniel Djurberg and Sami Sarkamies, analysts at Nordea in Stockholm and Helsinki, wrote in a note to clients today.
Ericsson reported second-quarter sales yesterday that missed estimates as competition with Huawei Technologies Co. for contracts to build and service phone systems intensified. While network revenue advanced about 1 percent in the period, sales at Ericsson’s support solutions business fell 33 percent. Total sales of 55.3 billion kronor ($8.4 billion), compared with an average analyst estimate of 56 billion kronor.
“We are especially worried about Support Solutions reporting very weak quarterly sales in most regions,” Nordea said, adding it’s not convinced Ericsson can gain market traction within Operations Support Systems and Business Support Systems outside emerging markets “due to ‘in-house solutions’ and heavy competition.”