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Why Ericsson Stock Soared 17%

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Apr. 23 2018, Updated 8:55 a.m. ET

Ericsson stock grew 17%

On Friday, Ericsson (ERIC) stock surged more than 17% after the telecom equipment maker posted profits for the first quarter of 2018. Ericsson closed the day up $1.14 at $7.78 on the company’s better-than-expected earnings in 1Q18. The company noted that its turnaround strategy has been bearing fruit, which is helping to reduce losses and boosting investors’ confidence, as is reflected in the stock price.

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Ericsson in 1Q18

Ericsson’s earnings of $0.01 per share came in above Wall Street expectations for losses of $0.02 per share. However, they were lower than the company’s earnings of $0.02 per share in 1Q17. Ericsson’s operating and net losses lessened, driven by the company’s cost-cutting efforts and improvement in its core Networks business.

However, the European (EFA) communication equipment company couldn’t beat revenue expectations in the quarter. Ericsson reported revenues of $5.14 billion, which was down from its 1Q17 revenue of $5.66 billion. First-quarter revenue also missed analysts’ expectations of $5.36 billion this year.

Stock price movement

Year-to-date (or YTD), Ericsson stock rose 18.8% compared to the S&P 500’s return of -0.1%. Stock prices for peers Cisco (CSCO) and Nokia (NOK) were up 16.9% and 27.9%, respectively. Juniper (JNPR) was down nearly 14% on a YTD basis as of April 20. Cisco, Nokia, and Juniper are slated to release their quarterly results on May 16, April 26, and May 1, respectively.

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