Citigroup Lowers Price Target for Ericsson (NASDAQ: ERIC) as Profitability Concerns Mount

• Citigroup has lowered its price target for Ericsson to SEK 105.00 from SEK 110.00, while maintaining a "Neutral" rating, suggesting a "hold" for investors.
• Ericsson's shares fell over 13 percent following its second-quarter 2026 results, which missed Wall Street's estimates for revenue and adjusted earnings per share (EPS).
• The company's profitability is under pressure from rising component costs and a reported drop in sales in North America.

Ericsson (NASDAQ: ERIC) is a global company that provides telecommunications equipment and services. It operates in key areas like networks, digital services, and managed services. The company faces intense competition from other major players in the telecom infrastructure market. Citigroup (NYSE: C) has recently updated its investment outlook on Ericsson's stock.

Citigroup has lowered its price target for Ericsson to SEK 105.00 from a previous SEK 110.00. Despite the lower target, the firm maintains its Neutral rating on the stock. This suggests a "hold" recommendation for investors. The stock price was $9.99 when this rating was published.

This adjustment follows a period of poor financial performance. On July 14, 2026, Ericsson's shares fell by more than 13 percent. The drop was a reaction to the company's second-quarter 2026 results, which did not meet Wall Street's estimates for revenue and adjusted earnings per share (EPS).

The company's profitability is under pressure from rising component costs, particularly a surge in memory-chip prices. As highlighted by MarketWatch, this issue led to the stock's worst reaction to an earnings report in almost three years. These costs are directly reducing the company's profit margins.

Ericsson has also issued its own caution on lower profitability, as reported by The Wall Street Journal. The company anticipates that profitability in its networks business will fall slightly in the next quarter. This is partly due to a reported drop in sales in North America.