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Earnings Beat: Harmonic Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

It's been a pretty great week for Harmonic Inc. (NASDAQ:HLIT) shareholders, with its shares surging 12% to US$12.59 in the week since its latest yearly results. Revenues were US$608m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.72, an impressive 1,700% ahead of estimates. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Harmonic

earnings-and-revenue-growth
earnings-and-revenue-growth

Taking into account the latest results, the current consensus from Harmonic's five analysts is for revenues of US$670.8m in 2024. This would reflect a notable 10% increase on its revenue over the past 12 months. Statutory earnings per share are forecast to plummet 50% to US$0.38 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$732.3m and earnings per share (EPS) of US$0.56 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a large cut to earnings per share estimates.

The analysts made no major changes to their price target of US$16.00, suggesting the downgrades are not expected to have a long-term impact on Harmonic's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Harmonic analyst has a price target of US$18.00 per share, while the most pessimistic values it at US$14.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We can infer from the latest estimates that forecasts expect a continuation of Harmonic'shistorical trends, as the 10% annualised revenue growth to the end of 2024 is roughly in line with the 12% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 3.8% per year. So it's pretty clear that Harmonic is forecast to grow substantially faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Harmonic going out to 2025, and you can see them free on our platform here..

And what about risks? Every company has them, and we've spotted 2 warning signs for Harmonic (of which 1 is concerning!) you should know about.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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

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