JP Morgan raises Ericsson to overweight

A Sony Ericsson logo on a smartphone is pictured at a mobile phone shop in Tokyo October 7, 2011.

(Reuters) - Ericsson, the world's biggest maker of equipment for mobile phone networks, is expected to gain as European operators begin to place orders by the year-end, J.P. Morgan Securities said and upgraded the stock to "overweight" from "neutral."

Shares of Ericsson -- which in January said it had more than 60 percent market share in long-term evolution or LTE wireless technology -- were trading up nearly 3 percent at 66.50 Swedish crowns by 0928 GMT on Thursday.

Despite concerns over share loss to Chinese rivals, Ericsson has been the only wireless infrastructure company to gain market share over the last three to four years with its LTE technology and successful consolidation of Nortel's businesses, JP Morgan said.

Some analysts expect a near-term recovery in spending in the United States and expansion in Europe to put the company in line for lucrative network upgrades in the coming years.

New upgrades for high-speed 3G digital data services for GSM carriers should also help margins, said JP Morgan analyst Sandeep Deshpande.

Deshpande is a five-star rated analyst for the accuracy of his earnings estimates on the companies under his coverage, according to Thomson Reuters' StarMine data.

Ericsson, Alcatel-Lucent and Nokia Siemens Networks currently face stiff competition from Chinese firms Huawei Technologies Co and ZTE.

Ericsson also competes with Alcatel-Lucent in providing gear to U.S. operators like Verizon Wireless and AT&T that have built large LTE networks.

In January, Ericsson stunned markets with a 50 percent drop in quarterly profit, adding to signs from the corporate world that economic growth may be grinding to a halt.

(Reporting by Rachel Chitra in Bangalore; Editing by Tenzin Pema)