🚀 June’s AI-picked stocks soar, with Adobe +18.1% in 11 days. Don’t miss July’s upcoming picks.Unlock full list

Ouster shares downgraded on valuation concerns

EditorAhmed Abdulazez Abdulkadir
Published 05/22/2024, 07:26 AM

On Wednesday, Cantor Fitzgerald adjusted its stance on Ouster Inc. (NYSE: NYSE:OUST), shifting from an Overweight to a Neutral rating. The firm raised its price target to $13.00 from the previous $8.00. This change comes after a significant increase in Ouster's stock price, which has risen approximately 61% since the beginning of the year.

The revision of the price target to $13 reflects an improved outlook on Ouster's financial performance. Cantor Fitzgerald now expects Ouster to achieve a gross margin of 29% for the fiscal year 2024, up from the previous estimate of 20%. This adjustment is based on the company's enhanced margin trajectory following the merger with Velodyne.

Additionally, the firm has reduced its operating expense projections for Ouster, with the fiscal year 2024 estimate now at $131 million, down from $161 million. The forecast for fiscal year 2025 has also been lowered to $132 million from $154 million. These revisions suggest a more efficient cost structure for Ouster moving forward.

Despite the positive adjustments to Ouster's financial estimates, the downgrade to a Neutral rating stems from concerns over the company's current market valuation. Cantor Fitzgerald acknowledges Ouster's strong fundamental position within the LIDAR industry but suggests that the stock's rapid year-to-date ascent may have outpaced its intrinsic value.

The valuation method employed by Cantor Fitzgerald combines a 50% weighting on the enterprise value to revenue ratio for the year 2025 and a 50% weighting on the enterprise value to EBITDA ratio for the same year. This approach has been used to determine the new $13 price target for Ouster's shares.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.