Ouster (OUST): Evaluating Valuation After Margin Gains and Shift to Recurring Software Revenue

Ouster (OUST) has been getting attention after steady improvements in its net margin, due to a clear push on revenue growth, reducing costs, and developing recurring software streams. Investors are watching to see how strategic product and software updates impact long-term returns.

See our latest analysis for Ouster.

Ouster’s share price has seen impressive momentum this year, currently trading at $29.58 after a 139.5% year-to-date gain. While short-term fluctuations have led to some volatility, the total shareholder return for the last 12 months sits at a remarkable 266.5%. This signals that investors are starting to price in the company’s growth potential and successful business pivot. Longer-term holders are still underwater, but recent momentum suggests building investor confidence around Ouster’s transformation and recurring revenue strategy.

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With shares trading just below analyst targets and revenue growth topping 27% annually, investors are left to ask whether the recent run has left the stock undervalued or if future gains are already priced in.

Most Popular Narrative: 15.5% Undervalued

Ouster’s most followed narrative places its fair value at $35, notably above the recent closing price. This perspective centers on expansion plans, integration of lidar technology, and software-driven growth.

Ouster is tapping into the massive Intelligent Transportation Systems (ITS) market with their Blue City traffic management solution, which could drive significant revenue growth as they expand deployments across the US, Europe, and Asia. This is expected to positively impact revenue.

Read the complete narrative.

Want to know the catalysts making analysts ultra-bullish? The narrative relies on fast revenue gains, digital market expansion, and surprisingly aggressive future profit assumptions. Don’t miss how these bold projections could justify a premium typically reserved for blue-chip disruptors. Get the full inside story.

Result: Fair Value of $35 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, the narrative could unravel if Ouster’s revenue growth slows or if competition from established lidar providers puts additional pressure on its market share.

Find out about the key risks to this Ouster narrative.

Build Your Own Ouster Narrative

If you see Ouster’s situation differently or want to dig into the numbers yourself, why not generate your own view in just a few minutes, and Do it your way

A great starting point for your Ouster research is our analysis highlighting 2 key rewards and 4 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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