It's been a sad week for Harmonic Inc. (NASDAQ:HLIT), who've watched their investment drop 17% to US$9.51 in the week since the company reported its yearly result. It looks like a credible result overall - although revenues of US$679m were in line with what the analysts predicted, Harmonic surprised by delivering a statutory profit of US$0.33 per share, a notable 16% above expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Harmonic

After the latest results, the consensus from Harmonic's four analysts is for revenues of US$641.8m in 2025, which would reflect a measurable 5.4% decline in revenue compared to the last year of performance. Per-share earnings are expected to ascend 18% to US$0.40. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$712.6m and earnings per share (EPS) of US$0.70 in 2025. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a pretty serious reduction to earnings per share estimates.

The consensus price target fell 15% to US$12.29, with the weaker earnings outlook clearly leading valuation estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Harmonic, with the most bullish analyst valuing it at US$14.00 and the most bearish at US$10.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that revenue is expected to reverse, with a forecast 5.4% annualised decline to the end of 2025. That is a notable change from historical growth of 11% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 8.8% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Harmonic is expected to lag the wider 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. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Harmonic's future valuation.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Harmonic analysts - going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 2 warning signs for Harmonic that you need to be mindful of.

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.