After Consolidating Over The Past Month, What’s Next For Ericsson Stock?

Ericsson stock (NASDAQ: ERIC) is up 3% in the past month (21 trading days), outperforming the S&P 500 which was down more than 6% over this period. If you look at the change over the last five and ten days, the stock has returned -3.1% and -0.3%, respectively, following a strong sell-off in the broader markets. However, on both occasions the stock still performed better than the S&P 500. Ericsson, a Swedish multinational networking and telecommunications company, reported a drop in sales in its Q3 2021 earnings in October, with revenue dropping to $6.27 billion from $6.4 billion in Q3 ’20. However, gross margins (43.1% to 44%) and operating margins (15% to 15.7%) saw an improvement, leading to a rise in EPS from $0.18 to $0.19 over this period. This, combined with Ericsson’s agreement to acquire Vonage, a cloud-based telecom company in a deal valued at close to $6.2 billion, saw the stock jump around 15% in late-2021. Additionally, Ericsson is set to announce its full-year 2021 earnings later this week.

Now, is Ericsson stock set to continue its rally or could we expect a pullback? We believe that there is an average 51% chance of a rise in ERIC stock over the next month (21 trading days) based on our machine learning analysis of trends in the stock price over the last ten years. See our analysis on ERIC Stock Chance of Rise. To learn more about the sources of Ericsson’s revenues, see Ericsson (ERIC) Revenues: How Does ERIC Make Money?

Twenty-One Day: ERIC 3%, vs. S&P500 -6.3%; Outperformed market

(33% likelihood event; 51% probability of rise over next 21 days)

• ERIC stock rose 3% the last twenty-one trading days (one month), compared to a broader market (S&P500) drop of 6.3%
• A change of 3% or more over twenty-one trading days is a 33% likelihood event, which has occurred 830 times out of 2514 in the last 10 years
• Of these 830 instances, the stock has seen a positive movement over the next twenty-one trading days on 425 occasions
• This points to a 51% probability for the stock rising over the next twenty-one trading days

Ten Day: ERIC -0.3%, vs. S&P500 -6%; Outperformed market

(48% likelihood event; 58% probability of rise over next 10 days)

• ERIC stock dropped a marginal 0.3% over the last ten trading days (two weeks), compared to a broader market (S&P500) drop of 6%
• A change of -0.3% or more over ten trading days is a 48% likelihood event, which has occurred 1206 times out of 2517 in the last 10 years
• Of these 1206 instances, the stock has seen a positive movement over the next ten trading days on 697 occasions
• This points to a 58% probability for the stock rising over the next ten trading days

Five Day: ERIC -3.1%, vs. S&P500 -5.7%; Outperformed market

(18% likelihood event; 57% probability of rise over next five days)

• ERIC stock dropped 3.1% over a five-day trading period ending 1/21/2021, compared to the broader market (S&P500) which was down almost 6%.
• A change of -3.1% or more over five trading days (one week) is an 18% likelihood event, which has occurred 461 times out of 2516 in the last ten years
• Of these 461 instances, the stock has seen a positive movement over the next five trading days on 261 occasions
• This points to a 57% probability for the stock rising over the next five trading days

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[1] Month-to-date and year-to-date as of 1/24/2022
[2] Cumulative total returns since the end of 2016

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