Harmonic Likely To See Upside After Securing Comcast Deal And Emerges As Front-Runner For Charter Win, Analysts Say - Harmonic (NASDAQ:HLIT)

Needham analyst Ryan Koontz reiterated Harmonic Inc HLIT with a Buy and maintained a $19 price target.
HLIT reported a strong 4Q22. Revenue and Non-GAAP EPS of $164.3 million and $0.17 beat consensus estimates.
Comcast Corp CMCSA carried the quarter at 48% customer concentration, sure to concern investors that other tier 1 CableOS software deployments are not scaling as quickly.
Book/bill of 0.79 declined from 1.1 last quarter, while total backlog and deferred revenue of $457.1 million (+4% Y/Y -7% Q/Q) reflected normalization of post-pandemic customer ordering patterns.
The 1Q23 and F23 guidance was described as "conservative" and assumes little contribution from new cable customer wins and reflects the transition in video from license to subscription revenue.
The analyst's F23 estimates decline -2%/-$.09, and introduced F24 revenue/EPS numbers at $873 million/$1.00.
Despite a softer outlook for C23 than hoped, management exhibited a quietly confident tone the analyst believe indicates confidence in ramping wins from existing CableOS wins, a meaningful upside to C23 guidance, and a substantial likelihood of success at Charter Communications, Inc CHTR.
Raymond James analyst Simon Leopold maintained an Outperform and lowered the price target from $18 to $17.
The analyst's thesis regarding Harmonic's leading position in the evolution of broadband networks remains intact, but those seeking instant gratification may be disappointed.
The primary negative element stems from the more significant erosion of Harmonic's video segment, but management maintained and expressed confidence in its 2025 outlook.
With Comcast secured, investor focus has shifted to Charter.
Charter's plan calls for virtual CCAP and DAA deployment in 2024, which the analyst saw as the actual prize that Harmonic has yet to secure. However, in his view, it remains the clear front-runner.
Price Action: HLIT shares traded lower by 6.90% at $13.22 on the last check Tuesday.

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