Ericsson (ERIC) is teaming up with Alphabet (GOOGL) Google Cloud to develop 5G and edge cloud solutions. The strategic partnership is aimed at accelerating the communication service provider’s digital transformation while unlocking use cases for consumers and enterprises.
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D-15 Labs in Silicon Valley will be the epicenter of the strategic collaboration between the two companies. From the facility, Ericsson and Google Cloud will develop and test advanced technologies on a 5G platform. The two have already on-boarded Ericsson 5G on Anthos. (See Ericsson stock chart on TipRanks)
Ericsson and Google Cloud have previously partnered to enable the digital transformation of operator networks and application migration.
“We are excited about our partnership with Google Cloud as we engage with our customers to leverage our combined capabilities to solve real-world business challenges for the benefit of consumers, enterprises and society at large,” Niklas Heuveldop, President of North America Ericsson, said.
Additionally, Ericsson and Google Cloud are working on enterprise applications. The project seeks to automate the functions of 5G network and cloud-based applications. The offerings from the collaboration targets enterprises in various sectors, including the automotive and manufacturing sectors.
Recently, UBS analyst Francois Xavier Bouvignies downgraded Ericsson to a Sell with a SEK97.00 price target. According to the analyst, the company has reached a peak in terms of market share after strong execution in the past three years, driven by growth in 5G and data on the back of new management.
Bouvignies stated, “Despite a strong outlook for H2 21 driven by C-band investment in the US, we argue the current share price implies 2% growth versus history of -1% to 1%. In addition, we believe Ericsson is trading at a 10-25% premium on P/E 2023E versus Nokia (5% discount historic average), which suggests high expectations.”
Consensus among analysts is a Moderate Buy based on 3 Buys and 1 Sell. The average Ericsson price target of $19 implies 49.61% upside potential to current levels.
ERIC scores 7 out of 10 on TipRanks’ Smart Score rating system, suggesting that the stock is likely to perform in line with market averages.
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