Harmonic Stock Is A Buy At The Current Price (NASDAQ:HLIT)

Harmonic (NASDAQ:HLIT) reports a significant amount of cash ready to be invested in research and development and marketing. Let’s say it this way, I believe that the management is delivering a very optimistic outlook: With this information, the company and most market participants are expecting revenue and FCF growth. If we include a WACC of 7.8%, the net present value of the FCF would stay close to $1 billion: The selection of the exit multiple was not easy. I assumed that the company’s capex/sales and change in working capital/sales would stay approximately the same as in the past: Finally, putting everything together, I obtained a free cash flow of $55-$100 million. If we use a WACC of 15%, the net present value of the FCF stands at $395 million: If we assume an exit multiple of 23.5x-15x, the IRR would stay at -1% and -3%, and the target price would be $10-$6.95: Harmonic reports a significant amount of cash that can be invested in research and development and marketing activities.