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CLEVELAND - Ancora Holdings Group, LLC, a significant shareholder in Harmonic Inc . (NASDAQ: NASDAQ:HLIT), has publicly advocated for the communication technology company to explore strategic alternatives, including a potential sale. Ancora believes that Harmonic, currently trading around $12, has the potential to increase its share price to approximately $20 per share by either achieving its 2026 broadband targets or through acquisition by a well-capitalized buyer.
According to Ancora, Harmonic possesses strong financials, top-tier products, and is a leader in market innovation but suffers from a low trading multiple due to poor investor communication by its management. The shareholder group contends that there is a clear opportunity for Harmonic to attract interest from acquirers such as Ciena (NYSE:CIEN) Corporation, suggesting that the company's refreshed board should evaluate Harmonic's standalone prospects in comparison to viable sale options.
Ancora plans to engage in a constructive dialogue with Harmonic's Board of Directors to discuss the company's future direction. The shareholder group has called for feedback from other investors ahead of Harmonic's 2025 Annual Meeting of Shareholders, emphasizing the urgency of realizing the company's full potential.
This push for strategic review comes as Ancora, which offers investment advisory, wealth management, retirement plan services, and insurance solutions, seeks to maximize value for shareholders. The firm is known for its long-term support of union labor and has a history of working with union groups and public pension plans.
The information is based on a press release statement from Ancora Holdings Group, LLC.
In other recent news, Harmonic Inc. reported robust growth and record Q3 results, with a year-over-year revenue increase of 54% to $195.8 million. The Broadband segment, driven by strong demand for the cOS solution, contributed significantly to this performance. Despite a slight decrease year-over-year, the Video segment showed resilience with a 10% sequential increase, and Harmonic's adjusted EBITDA and earnings per share (EPS) exceeded expectations, standing at $43.4 million and $0.26 respectively.
Meanwhile, Jefferies has downgraded Harmonic from Buy to Hold and adjusted the price target to $12.50 from the previous $14.00. This adjustment follows Harmonic's strong third-quarter performance and its guidance for the full year. Jefferies acknowledged Harmonic's strong results and noted that the company's guidance for the year aligns with current expectations, even as projections for the fourth quarter increase.
However, concerns have been raised regarding potential softness in the Broadband segment for the year 2025. Harmonic's current trajectory has been overshadowed by the longer-term expectations of segment softness. Jefferies' analysis suggests caution as Harmonic navigates through the forecasted industry headwinds. These are the recent developments in the company's operations and market outlook.
InvestingPro Insights
Diving deeper into Harmonic's financial landscape, InvestingPro data reveals some intriguing insights that complement Ancora's perspective. The company's market capitalization stands at $1.39 billion, with a P/E ratio of 16.03, suggesting a moderate valuation relative to earnings. This aligns with Ancora's view that Harmonic may be undervalued in the market.
InvestingPro Tips highlight that Harmonic operates with a moderate level of debt and maintains liquid assets that exceed short-term obligations. These factors could make the company an attractive acquisition target, as suggested by Ancora, due to its strong financial position.
However, it's worth noting that Harmonic's stock has fared poorly over the last month, with a 1-month price total return of -17.51%. This recent underperformance might be contributing to shareholder activism and calls for strategic alternatives.
On a positive note, analysts predict the company will be profitable this year, and Harmonic has been profitable over the last twelve months. The company's revenue for the last twelve months as of Q3 2023 was $623.65 million, with a revenue growth of 3.06% over the same period.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights. In fact, there are 5 more InvestingPro Tips available for Harmonic, which could provide valuable context for understanding the company's potential and the merits of Ancora's proposal.
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