On Thursday, Ericsson’s shares (ST:ERICb) dropped by more than 4 per cent after Credit Suisse lessened its rating for the Swedish telecommunications equipment manufacturer and predicted ‘lacklustre’ earnings growth until 2024.

The bank downgraded Ericsson to ‘underperform’ from ‘outperform’ and cut its price target to SEK 69 a share from SEK 113 a share. It is expected that the profits of the company will be particularly affected over the next two years by the need to pour funds into developing its global 5G wireless network capabilities.

The 5G networks have become pivotal for Ericsson and competitors like China’s Huawei and Finland’s Nokia (HE:NOKIA). 5G is regarded as a major element in powering machines with futuristic applications like autonomous vehicles and drones.

Ericsson has estimated that global 5G mobile subscriptions may climb above 1B this year, driven by an uptick in adoption in the US and China, and is likely to hit as many as 4.4B by 2027.

The Credit Suisse analysis further said that Ericsson will see demand slowing as the 5G capital expenditures climb and macro-economic headwinds grow, especially from zooming consumer prices. Organic revenue is forecast to expand by 5 per cent this year but remains roughly flat until the end of the 2024 fiscal year.