On Wednesday, Cantor Fitzgerald adjusted its outlook on shares of Ouster Inc. (NYSE: NYSE:OUST), a provider of high-resolution digital lidar sensors. The firm reduced the price target for Ouster shares to $12.00 from the previous $13.00, while maintaining a Neutral rating on the stock.
The adjustment by Cantor Fitzgerald reflects a cautious stance towards Ouster's financial prospects. The firm cited a decrease in peer multiples as the primary reason for the price target reduction. Alongside the price target change, the firm also revised its forecast for the company's fiscal year 2024 revenue downward to $112.4 million from the earlier estimate of $114.3 million.
The new revenue estimate corresponds with a projected shipment of 18,340 units, a decrease from the previously anticipated 19,000 units.
Cantor Fitzgerald employs a relative-multiple-valuation approach to determine the value of Ouster, with equal emphasis on estimated enterprise value to revenue (EV/Revenue) and enterprise value to EBITDA (EV/EBITDA) for the year 2026. This methodological approach underpins the firm's $12 price target for Ouster's stock.
The report also outlined several key risks that could impact Ouster's performance and stock valuation. These risks include potential challenges associated with the integration of mergers, disruptions in the supply chain, intense competition in the market, the rate of customer adoption of Ouster's technology, regulatory changes by the government, and the company's ability to maintain and leverage its pricing power in the industry.
In other recent news, Ouster Inc. has been the subject of a rating downgrade by Cantor Fitzgerald, shifting from an Overweight to a Neutral rating. This adjustment comes despite the firm's increased price target for Ouster, which has been raised to $13.00 from the previous $8.00. The change in rating is primarily due to concerns over the company's current market valuation, even though Ouster has seen a significant surge in its stock price, up approximately 61% since the start of the year.
Cantor Fitzgerald has also revised its financial estimates for Ouster, expecting the company to achieve a gross margin of 29% for the fiscal year 2024, a notable increase from the previous estimate of 20%. This is largely due to Ouster's improved margin trajectory following its merger with Velodyne.
The firm has also reduced its operating expense projections for Ouster, with the fiscal year 2024 estimate now at $131 million, down from $161 million, indicating a more efficient cost structure for the company in the future.
These recent developments reflect a mixed outlook for Ouster, with positive adjustments to financial estimates being offset by concerns over the company's valuation. Despite the downgrade, Cantor Fitzgerald acknowledges Ouster's strong fundamental position within the LIDAR industry.
InvestingPro Insights
In light of Cantor Fitzgerald's recent assessment of Ouster Inc. (NYSE: OUST), additional insights from InvestingPro can provide a broader context for investors considering the stock. According to real-time data, Ouster holds a market capitalization of approximately $492.05 million, which reflects the company's current valuation in the market. Despite a significant revenue growth of 85.09% in the last twelve months as of Q1 2024, Ouster's financials reveal a gross profit margin of 19.0%, indicating potential challenges in maintaining profitability.
InvestingPro Tips suggest that Ouster has more liquid assets than short-term obligations, a positive sign for the company's liquidity. However, it is also important to note that analysts have revised their earnings expectations downwards for the upcoming period, which could signal caution among market watchers. Additionally, Ouster's stock price has experienced considerable volatility, with a substantial uptick over the last six months, yet it has also faced a sharp decline over the last month.
For investors seeking a deeper dive into Ouster's financial health and stock performance, more InvestingPro Tips are available, offering a comprehensive analysis of the company's prospects. As of now, there are 13 additional tips listed on InvestingPro's platform (https://www.investing.com/pro/OUST), which can serve as a valuable resource for those looking to make an informed investment decision.
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