Ouster (OUST): Valuation in Focus After Strategic Security Partnership With Constellis Sparks Investor Interest

Ouster (NasdaqGS:OUST) has caught the attention of investors this week after announcing a new strategic partnership with Constellis, a global leader in security solutions. The two companies are joining forces to combine Ouster’s Gemini and digital lidar technology with Constellis’s AI-driven sensor platform, Lexso. The goal is to deliver advanced, unified security tools that promise better situational awareness and smarter, real-time operational decisions for clients worldwide.

This partnership appears to have sparked serious investor enthusiasm. Ouster’s stock has rallied for four consecutive days, jumping another 13% as news of the collaboration broke. The company is now experiencing some of its strongest momentum this year, with returns up over 462% in the past three months and more than 470% over the full year, following solid revenue growth and improving operational efficiency.

With shares on a winning streak and optimism running high, the question is whether Ouster is now undervalued after the surge or if the current price already reflects all of that future growth potential.

Most Popular Narrative: 1% Undervalued

According to the most widely followed perspective, Ouster is considered just slightly undervalued relative to its fair value estimate, with only a minimal discount between the current share price and analysts’ calculated target.

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

Curious what’s really powering Ouster’s lofty price target? The narrative centers around ambitious revenue and profitability milestones, betting on a transformative leap in both sales and margins. Want to know which bold financial forecasts and market assumptions are driving the fair value calculation? The answer might surprise you.

Result: Fair Value of $35 (UNDERVALUED)

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

However, market uncertainties and intense competition from Chinese lidar companies could challenge Ouster’s optimistic growth forecasts and impact future revenue or margins.

Find out about the key risks to this Ouster narrative.

Another View: Multiples Tell a Different Story

While analysts peg Ouster as modestly undervalued, the market’s current price compared to sales for similar companies tells a different tale and suggests the stock could actually be expensive using this method. Which view will prove right?

See what the numbers say about this price — find out in our valuation breakdown.

Stay updated when valuation signals shift by adding Ouster to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Ouster Narrative

If you see things differently or want to dig deeper into the numbers yourself, you can easily craft your own Ouster narrative in just a few minutes. 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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