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Tuesday, Rosenblatt Securities adjusted its price target on Harmonic Inc . (NASDAQ:HLIT) shares, reducing it to $11 from the previous $12, while retaining a Buy rating on the company’s stock. Currently trading at $9.31, InvestingPro analysis suggests the stock is slightly undervalued. The adjustment follows Harmonic’s latest quarterly performance, which surpassed expectations, including the addition of two new Tier-1 customers in the United States.
Despite Harmonic’s strong quarter, with revenue growth of 11.65% over the last twelve months, the company’s guidance for the second quarter fell short of analyst and market projections. The company maintains a healthy financial position with a current ratio of 2.18 and operates with moderate debt levels. Management has retracted its full-year guidance, citing uncertainties about the potential effects of tariffs on the broader economic landscape and immediate customer behavior.
The firm’s analyst believes in the enduring potential of Harmonic’s CableOS solution, which is anticipated to be a leading next-generation broadband technology. The analyst’s confidence in the product’s capability to deliver superior outcomes remains a driving factor for maintaining a positive outlook on the stock. InvestingPro data reveals several additional insights, including analysts’ expectations of profitability this year despite projected sales decline. Discover 6 more exclusive ProTips and comprehensive analysis in the Pro Research Report.
The new price target is based on a 10 times enterprise value to EBITDA (EV/EBITDA) ratio, which aligns closely with the company’s current EV/EBITDA of 10.36x. With a gross profit margin of 54% and positive free cash flow yield, this valuation leaves room for potential growth as Harmonic continues to execute its business strategy. The reduction in the price target reflects a more cautious approach in light of the current economic uncertainties, while still signaling a belief in the company’s long-term growth prospects.
In other recent news, Harmonic Inc. reported its Q1 2025 earnings, surpassing expectations with an earnings per share (EPS) of $0.11, compared to the forecasted $0.05. Revenue reached $133.1 million, exceeding the anticipated $128.01 million. Despite the positive earnings report, Harmonic remains cautious about full-year guidance due to potential tariff impacts. The company noted strong cash flow and significant contributions from major customers such as Comcast (NASDAQ:CMCSA) and Charter. Harmonic’s broadband segment grew by 7.6% year-over-year, and the video segment increased by 11.8%, showcasing the company’s strategic focus on network optimization and virtualized access platforms. The firm also highlighted its ongoing efforts to mitigate tariff impacts, including supply chain diversification and cost management. Harmonic anticipates a resumption of revenue growth in 2026 but remains cautious about the near-term due to tariff uncertainties. The company continues to explore options to offset tariff sensitivity and maintain its market position.
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