A $10.71 ADS already needs about 18 times my $0.60 of 2027 earnings. Flat radio-access demand plus chip inflation leave a market-like return.
Key points
- SEK 59.5 billion of Q3 sales rose 7% organically; Networks grew 9% with some buying ahead of price rises.
- 17.0% adjusted EBITA margin this quarter; the CEO said 2027 may be a transition as contracts reprice.
- $0.60 is my 2027 EPS at SEK 10 per dollar; 18 times that is $10.80.
The call
The $10.71 price requires roughly 18 times my $0.60 of 2027 earnings, or about SEK 6.0 of profit on 3.22 billion shares. That multiple is what a stable radio-access franchise with a 3% dividend usually pays, not a growth story.
I believe 2027 sales stay near SEK 232 billion, the same as 2026, and the EBITA margin slips toward 14.5% as chip costs hit before prices catch up. That still produces $0.60 of earnings and a $10.80 stock, a market-like return.
Ericsson quarterly sales (SEK billions)Company releases through Q3 2026; Q4 2026E and 2027E are mine. As of Oct 15, 2026.
Valuation
| Item | Figure |
|---|
| 2026E sales | SEK 232 billion |
| 2027E sales | SEK 232 billion |
| 2027E net income | SEK 19.4 billion |
| 2027E EPS | $0.60 |
| Multiple | 18 times |
| 12-month target | $10.80 |
Eighteen times is the mid-cycle multiple for a cash-generative networks supplier with net cash of SEK 61 billion. Being a few dollars wrong either way is smaller than the dividend plus buybacks, so the rating is hold.
Adjusted EBITA margin vs what $10.71 needsQ3 report and my 2027 path. Price needs ~18 times $0.60 of 2027 EPS.
Risks
- Chip inflation could cut Networks gross margin below 49% before operators accept higher prices; watch Q4 and Q1 2027 margin ranges.
- Pull-forward of 2026 orders could reverse into a weak first half of 2027; watch organic Networks sales versus the 4% year-to-date pace.
- DOJ, SAMR or Anti-Terrorism Act outcomes could add cash charges not in contingent liabilities of SEK 4.3 billion.
What would change my mind
A 2027 organic sales guide above 5% with Networks adjusted gross margin held at 50% would support a higher multiple.