Harmonic (HLIT) Stock Forecast & Price Target

Harmonic Inc. reported a positive trend in its key performance indicators, with a 17% year-over-year increase in live cOS customers and a 18% year-over-year growth in connected modems, indicating strong demand for its broadband access solutions. The company's net gross margin (NGGM) improved to 54.4%, exceeding consensus expectations, and is projected to increase further in the upcoming quarter due to a favorable product mix. Additionally, Harmonic's operating margin is expected to expand steadily, supported by a broadening stream of contract wins, alongside a backdrop of increasing investments from telcos in fiber-to-the-home (FTTH) solutions to address rising broadband demand.

Harmonic Inc. has experienced a significant decline in its non-Comcast revenue, which decreased by 15% year-over-year to $81 million, primarily affected by challenges with Charter Communications. The company’s gross margins also contracted to 66.7%, down from 69% a year ago, indicating pressures on profitability as they navigate customer transitions and continued headwinds from major clients like Comcast and Charter. Furthermore, the company's guidance for fourth-quarter Broadband revenue anticipates a drop of 8% below consensus estimates, reflecting ongoing slowdowns in new hardware sales and a persistent pause in spending from key customers.