One thing we could say about the analysts on Ouster, Inc. (NYSE:OUST) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
Following the downgrade, the most recent consensus for Ouster from its six analysts is for revenues of US$52m in 2022 which, if met, would be a sizeable 35% increase on its sales over the past 12 months. Before the latest update, the analysts were foreseeing US$72m of revenue in 2022. It looks like forecasts have become a fair bit less optimistic on Ouster, given the sizeable cut to revenue estimates.
Notably, the analysts have cut their price target 45% to US$5.33, suggesting concerns around Ouster's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Ouster at US$10.00 per share, while the most bearish prices it at US$2.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Ouster's growth to accelerate, with the forecast 83% annualised growth to the end of 2022 ranking favourably alongside historical growth of 46% per annum over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 7.0% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Ouster to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their revenue estimates for this year. They're also forecasting more rapid revenue growth than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Ouster's future valuation. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Ouster going forwards.
Looking for more information? We have estimates for Ouster from its six analysts out until 2024, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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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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