Check out Harmonic (HLIT)’s valuation as new AI video and broadband deals draw investor interest

Harmonic (HLIT) is back in the spotlight after announcing an expansion of its video appliances and SaaS capabilities, including next-generation Spectrum X media servers and AI-driven services, along with new client traction from Vyve Broadband’s broadband modernization.

Check out our latest analysis on harmonics.

Despite a flurry of product launches and a Vyve broadband win, Harmonic’s recent stock returns have been weak, with a 7-day stock return of 8.61% and a 90-day stock return of 12.79%. This results in a 1-year total shareholder return of 7.89%, a 3-year total shareholder return of 25.52%, and a 5-year total shareholder return of 11.59%, indicating that long-term holders still benefit.

If you’re intrigued by these broadband and video trends, you might want to take a look at these 35 AI Infrastructure Stocks for another way to find the names of the AI-driven infrastructure that will form the next wave of connectivity.

With the stock delivering a one-year total return of 7.89% with mixed recent performance and an analyst target of US$12.71 versus the last closing price of US$9.34, the key question is whether Harmonic is still undervalued or if the market has already realized its potential.

Most popular story: 22.8% are underrated

Harmonic’s most-watched valuation story has a fair value of $12.10 per share, compared to a closing price of $9.34, according to NateF. This sets up a clear gap that the story attempts to explain.

Harmonic Inc. (NASDAQ: HLIT) has shown strong financial performance recently, particularly in its broadband sector. In Q3 2024, the company reported a 54% year-over-year increase in revenue to $195.8 million. This growth was primarily driven by a 92% jump in the broadband sector due to strong customer demand and market leadership.

Read the whole story.

Want to understand why this story has room to outperform today’s price? The company is heavily reliant on strong broadband revenue, strong margins, and expanding future earnings multiples reflected in its $12.10 fair value.

Result: Fair value $12.10 (undervalued)

Read the full explanation to understand what’s behind the predictions.

However, this depends on continued broadband momentum, and any delays or setbacks in the Unified RF deployment plan could quickly reduce the 22.8% undervaluation.

Find out about the key risks to this Harmonic story.

Another way to look at it: price vs. sales raises questions

This 22.8% undervaluation story sits uncomfortably alongside Harmonic’s P/S of 2.9x. This is higher than the U.S. telecom industry’s 1.9x, its peer average of 2.3x, and its fair share of 1.8x. If the market is leaning towards its fair proportion, what happens in the case of an uptick?

See what the numbers say about this price. Please check the rating breakdown.

next step

If this combination of potential benefits and concerns seems uncertain, don’t remain on the sidelines. Instead, check out the perfect balance of 2 major rewards and 3 key warning signs to decide where you stand.

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If you want to read Harmonic’s story and think about the bigger picture, don’t stop here. Use the screener below to quickly uncover other opportunities that may fit your checklist.

This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.

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