“We admit it is a risky change of recommendation”, a London-based analyst said after raising Ericsson’s stock share to “outperform”.

The British stockbroker Cazenove believes that Swedish Ericsson, the world's leading mobile phone network provider, is headed for a brighter future because of positive currency impact, encouraging newsflow for smartphones and improving conditions at Sony Ericsson and ST-Ericsson.

Therefore, the stockbroker raises its recommendations from underperform to outperform, according to a report dated the 22 July.

“We admit it is a risky change of recommendation only a few days ahead of the results, but we believe that investors are likely to focus much more on margins than on the top-line, a change of focus we were not expecting ahead of the results season”, François Meunier, Head of European Technology Research at Cazenove, writes in the report.

He believes that Ericsson management are more prepared to cut costs than Nokia and are likely to confirm further market share gain from Nokia Siemens and Alcatel.

“We believe that investors are likely to reward Ericsson again after one quarter of underperformance”, François Meunier writes.

The Cazenove analyst expects gross margins to reach 36.8 percent, higher than SME Direkt’s consensus of 36.3 percent, while earning per share is expected of 1.02 kronor versus consensus 0.91 kronor.

Last week Sony Ericsson, the handset making joint venture between Japan’s Sony and Ericsson, made a second-quarter loss of 213 million euros ($301 million), compared to a profit of 6 million euro the year earlier, as sales fell 40 percent to 1.68 billion euros.

"We remain worried by the heavy losses at Sony Ericsson but the cash position is strong enough to allow for at least six quarters of losses", François Meunier said.

The same day Finnish telecoms giant Nokia revealed a 66-percent collapse in quarterly net profit to €380 million on falling handset sales and lower prices.

Ericsson's financial report will be released on Friday, July 24.