OUST: Defense Certification Will Support Durable Competitive Moat And Upside Potential

Analysts have raised their price target on Ouster to $33 from $30, citing the company's Q3 revenue beat and the view that recent Department of Defense certification creates a durable competitive moat.

Analyst Commentary

While the latest rating change reflects increased confidence in Ouster's long term positioning, some bearish analysts remain cautious on the sustainability of recent momentum and the implications for valuation. The Q3 beat and Department of Defense certification are viewed as important milestones, but not sufficient on their own to eliminate execution and growth risks.

Bearish analysts point out that the stock's recent rally already bakes in a substantial portion of anticipated defense and industrial demand, leaving less room for error if deal timing slips or if follow on orders are slower than expected. They also highlight that the lidar market remains highly competitive, with pricing pressure and customer concentration risk still key variables in any long range model for the company.

Bearish Takeaways

• Bearish analysts caution that the higher price target may already reflect optimistic assumptions for defense related revenue, leaving limited upside if contract ramps are more gradual than expected.
• Some see downside risk to medium term growth forecasts if broader industrial and autonomous vehicle deployments lag, which could pressure valuation multiples from current levels.
• There are concerns that elevated R&D and commercialization spending required to support certified products could weigh on profitability and delay the path to sustainable free cash flow.
• Bearish analysts also flag execution risk around converting initial Department of Defense approvals into consistent, large scale orders, which could create volatility in quarterly results and investor sentiment.

What's in the News

• Ouster issued new earnings guidance for the fourth quarter of 2025, projecting revenue between $39.5 million and $42.5 million, which signals confidence in near term demand (company guidance filing).

Valuation Changes

• Fair Value, raised from $30.00 to $33.00, has risen modestly and reflects a slightly more optimistic view of Ouster's long term earnings power.
• The Discount Rate, increasing from 8.09 percent to 8.40 percent, has risen slightly and implies a marginally higher perceived risk or required return.
• Revenue Growth, moving from 31.92 percent to 31.79 percent, has edged down slightly and indicates a nearly unchanged but marginally more conservative growth outlook.
• The Net Profit Margin, adjusted from 8.96 percent to 8.75 percent, has declined slightly and suggests a modest tempering of long term profitability expectations.
• Future P/E, rising from about 102.5x to 111.6x, has increased meaningfully and indicates a higher valuation multiple being applied to projected earnings.