Ouster stock soars on key Pentagon approval: too late to buy OUST shares?

Ouster Inc (NASDAQ: OUST) rallied as much as 25% on Wednesday after announcing a major milestone that positions it as a key player in defense-grade drone technology.

According to the San Francisco headquartered firm, the Department of Defense has picked its OS1 digital lidar sensor for use in unmanned aerial systems (UAS).

Including today’s rally, Ouster stock is up some 200% versus its year-to-date low in early April.

Ouster secures a competitive edge over rivals

Ouster’s digital lidar sensor earned a coveted spot on the Defense Innovation Unit’s curated list of interoperable, NDAA-compliant components and software called the Blue UAS Framework after rigorous testing.

In fact, OS1 is so far the only high-resolution 3D lidar sensor that has succeeded in winning a spot on that list, which “marks a significant step in making our the go-to solution for advanced perception in autonomous systems,” according to Mark Frichtl, the company’s chief of technology.

Ouster stock is flying higher this morning because the OSI offers remarkable improvements in terms of size, power efficiency, and durability, compared to the legacy 2D lidar systems commonly used in drones.

Ouster’s technology is already in use across various US agencies, including the Army, Navy, and NASA.

With this latest validation from Pentagon, it could see accelerated growth in both defense and public-sector markets.

What Pentagon approval means for Ouster stock

Pentagon’s endorsement for the OS1 digital lidar sensor delivers a significant boost to Ouster Inc’s credibility and growth prospects – and strengthens the company’s presence in government-backed programmes.

Now that the US Department of Defense has validated its sensor’s performance, resilience against cyberattacks, and compliance with strict government standards, OUST is strongly positioned to attract lucrative defense contracts and broader adoption in federal applications.

Simply put, the OS1 has essentially secured a competitive edge over rival technologies, which may unlock significant avenues for recurring revenue and translate to stronger investor confidence over time.  

Ouster shares do not currently pay a dividend, though.

Should you buy OUST shares at current levels?

In May, Ouster Inc. reported better-than-expected revenue for its fiscal Q1. Still, investors should practice caution in buying OUST shares at current levels since the company is yet to turn a profit.

In its latest reported quarter, the Nasdaq-listed firm lost 42 cents on a per-share basis.  Ouster stock may be a high-risk investment also because today’s rally has already pushed it a bit too far.

While the consensus rating on OUST remains a “buy”, the average analysts’ price target of a little above $14 indicates potential downside of about 25% from here.

This indicates that you may have already missed the boat on Ouster Inc., and there may be better stocks out there to gain exposure to the lidar technology.

The post Ouster stock soars on key Pentagon approval: too late to buy OUST shares? appeared first on Invezz