Harmonic (HLIT) Stock Forecast & Price Target

Harmonic Inc has reported a substantial NGGM of 54.4%, reflecting a year-over-year increase of 70 basis points and a quarter-over-quarter increase of 30 basis points, driven by a favorable product mix that includes higher margin broadband products. The company is anticipated to achieve steady operating margin expansion alongside top-line growth, supported by a widening gross margin and enhanced operating expense efficiencies due to increasing contract wins with cable operators. Additionally, the outlook for 2026 appears promising, with management expressing optimism for revenue growth as demand increases for broadband services, particularly through FTTH investments and the ramping of D4U products at major operators.

Harmonic Inc. is experiencing a decline in non-Comcast revenue, which decreased by 15% year-over-year to $81 million, largely due to challenges with Charter, despite potential future growth from new clients. The company's fourth-quarter guidance indicates a significant drop in broadband revenue expectations to $90 million, down 8% below consensus, attributed to a slowdown in hardware sales and a pause in spending from Charter. Additionally, the video segment faces pressures from the transition toward software and SaaS solutions, as evidenced by revenue guidance of only $50 million, falling short of the anticipated $53.3 million, thus reflecting the overall cautious outlook for the company's financial performance.