Harmonic (HLIT) Stock Forecast & Price Target

Harmonic Inc. has demonstrated impressive performance metrics, with a Next Generation Gross Margin (NGGM) of 54.4%, reflecting a year-over-year increase of 70 basis points and a quarter-over-quarter rise of 30 basis points, largely driven by a favorable shift toward higher-margin broadband products. The company anticipates continued steady operating margin expansion alongside top-line growth, bolstered by a widening gross margin and operational efficiencies from a growing number of contracts with cable operators for cOS software and hardware nodes. Additionally, notable investments from telecommunications companies in Fiber to the Home (FTTH) and fixed wireless broadband present a robust growth opportunity, with management expressing optimism for sequential revenue growth moving into the first quarter and a promising outlook for fiscal year 2026.

Harmonic Inc. has experienced a significant decline in non-Comcast revenue, which fell 15% year-over-year to $81 million, largely attributed to challenges with Charter Communications, highlighting potential volatility in future growth despite new customer acquisitions. The company's guidance for fourth-quarter Broadband revenue is expected to be $90 million, an 8% shortfall from consensus estimates, and reflects a transition phase in hardware sales that may hinder short-term performance. Additionally, booking metrics have deteriorated, with a book-to-bill ratio of 0.9x and a backlog that decreased by 15% year-over-year, indicating potential challenges in order growth and overall business momentum.