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On Thursday, Oppenheimer began coverage on Ouster Inc. (NASDAQ:OUST), a company specializing in perception technology, assigning the stock an Outperform rating and setting a price target of $16.00. Currently trading at $10.62, the stock has shown remarkable momentum with a 67% gain over the past six months. The new rating reflects confidence in Ouster’s market position and potential growth within the Industrial AI sector. According to InvestingPro analysis, the company appears undervalued at current levels.
Ouster is recognized for its comprehensive product range and significant intellectual property holdings. With a market capitalization of $571 million and strong financial health indicators, including a healthy current ratio of 2.8 and more cash than debt on its balance sheet, the company maintains a solid foundation. Analysts at Oppenheimer highlight the company’s strategic placement in the Lidar industry, which has recently undergone considerable consolidation. Ouster stands out as a strong player, particularly in the United States and Western Europe, where original equipment manufacturers (OEMs) are increasingly focused on security within their supply chains and product development processes.
The Outperform rating and the $16 price target are based on a valuation of three times the estimated 2027 revenues of $282.9 million. This estimation is discounted by 10% for one year, which aligns with the valuations of Ouster’s industry peers. The projection appears well-supported by the company’s current performance, with revenue growing at 33.4% and a gross profit margin of 36.4%. The projection underscores the firm’s anticipation of Ouster’s solid trajectory in revenue growth over the next few years.
Ouster’s technology is poised to play a pivotal role in the expansion of the Industrial AI space, as companies seek to enhance their operational efficiency and security protocols. The company’s Lidar solutions are integral to this advancement, offering critical data and insights for various applications.
Oppenheimer’s initiation of coverage on Ouster Inc. is a notable development for the company, as it suggests investor confidence in its future performance and the broader Lidar and Industrial AI markets. The Outperform rating is an indicator of the firm’s belief that Ouster’s stock will perform well against the market or its sector in the foreseeable future.
In other recent news, Ouster Inc. reported its fourth-quarter 2024 earnings, revealing a revenue of $30 million, which surpassed analysts’ expectations of $29.75 million. Despite this revenue growth, the company posted an EPS of -0.48, missing the forecasted -0.35. For the full year, Ouster achieved a revenue of $111 million, marking a 33% year-over-year increase. The company maintained a strong financial position with $175 million in cash and no debt. In analyst updates, Cantor Fitzgerald’s Andres Sheppard raised the price target for Ouster from $10.00 to $11.00, maintaining an Overweight rating, citing the company’s diverse product line and robust customer base. Ouster shipped over 17,300 sensors in fiscal year 2024, up from 13,500 the previous year, demonstrating its competitive edge in the LIDAR industry. The company’s strategic focus for fiscal year 2025 includes scaling its software business and transforming its product portfolio to enhance profitability. Additionally, Ouster announced significant product innovations, including 3D zone monitoring, and plans to expand its software-attached business internationally.
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