Ericsson: UBS Downgrades To Sell

UBS analyst Gareth Jenkins this morning cut his rating on Ericsson (ERIC) to Sell from Neutral, cutting his target price to $6.29, from $7.93. (That corresponds to 50 Swedish kroner, down from 63.) Jenkins notes that the stock in 2008 fell 23%, out-performing its telecom equipment peers. He provides a list of 7 reasons to be more bearish on the stock in 2009: Cap ex cuts among carriers. Mix and lower volume likely to pressure gross margin. Strength in Chinese market likely to see share gains by Chinese vendors. Fixed-cost reduction unlikely. Cash from Sony-Ericsson likely to reduce. M&A risk remains. Long-term technology trends likely to be negative. Jenkins sees a 5% decline in revenues in 2009, or a 20% decline on a constant currency basis. He cut his 2009 EPS estimate to 3.14 SKr a share, down from 4.92, and below the Street consensus at 4.55. ERIC this morning is down 25 cents, or 3.3%, to $7.28. (link)