Rosenblatt cuts Harmonic price target to $12, maintains Buy rating

On Tuesday, Rosenblatt Securities adjusted its outlook on Harmonic Inc . (NASDAQ: NASDAQ:HLIT), reducing the price target to $12.00 from the previous $16.00. Despite the significant cut in the price target, the firm has maintained a Buy rating on the stock. According to InvestingPro data, analyst targets for the stock range from $10.00 to $18.00, with the current RSI suggesting the stock is in oversold territory.

Harmonic’s stock experienced a sharp decline of nearly 30% in after-hours trading following the company’s announcement that its Broadband business is projected to decrease by 13% at the midpoint in 2025. This downturn is attributed to slower than expected deployments of DOCSIS 4.0 technology. The company maintains strong fundamentals with a current ratio of 2.08 and operates with a moderate debt level, according to InvestingPro analysis.

The Rosenblatt analyst expressed an understanding of investor concerns, acknowledging that Harmonic’s leading position in next-generation broadband has not consistently translated into growth. However, the analyst believes that Harmonic is not losing market share and suggests that there are sensible reasons why the company’s guidance could outperform management’s current projections.

The firm’s perspective is that Harmonic’s management is attempting to recalibrate expectations in a single move to potentially allow for positive surprises later in the year. Despite the lowered guidance and ensuing investor dissatisfaction, Rosenblatt sees the current valuation of Harmonic shares at 7 times EV/2026 EBITDA as an indication of limited further downside risk. InvestingPro analysis reveals the company trades at an EV/EBITDA of 20.68x and maintains a healthy gross profit margin of 51.92%. Subscribers can access 6 additional ProTips and a comprehensive Pro Research Report for deeper insights into Harmonic’s valuation and growth prospects.

Rosenblatt’s stance remains positive on Harmonic, emphasizing that the current market valuation could present an opportunity for investors, given the potential for upside as the year progresses. Harmonic’s efforts to manage expectations and the firm’s belief in the company’s market position contribute to the decision to uphold the Buy rating despite the reduced price target.

In other recent news, Harmonic Inc. reported a significant 33% year-over-year revenue increase in its fourth-quarter 2024 results, along with a $0.32 rise in earnings per share. However, the company’s forecast for fiscal year 2025 was less optimistic, due to reduced demand from key clients Comcast (NASDAQ:CMCSA) and Charter, and a 24% drop in overall orders compared to the previous year. Analysts at Needham have adjusted their outlook on the company, lowering the price target to $14 from $18, while maintaining a Buy rating. This adjustment follows the company’s expectation of challenges with multi-vendor integration at Comcast and Charter, and a likely seasonal inventory build-up by customers. Despite these short-term obstacles, Needham analysts see the transition to a new D4U network as potentially beneficial for Harmonic’s competitive position in the market. They have reduced their fiscal year 2025 estimates and introduced fiscal year 2026 projections, which they believe could see a strong upside when industry spending rebounds. These are among the recent developments for Harmonic Inc.

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