Light Detection and Ranging (LiDAR) has applications in various fields, such as autonomous vehicles, scanners, and augmented reality (AR). With the Biden administration’s desire to have 50% of cars fueled by electricity to reduce pollution, the lidar market could gain significantly from greater automation. The rising adoption of lidar technology amid the fourth industrial revolution should drive the industry’s growth over the long term. The lidar market is expected to grow at a 22.7% CAGR to $6.71 billion by 2026.
With the rising popularity of lidar technology, particularly in the autonomous vehicles industry, Wall Street analysts predict the shares of lidar companies Ouster, Inc. (OUST) and Velodyne Lidar, Inc. (VLDR) will double in price in the near term.
Ouster, Inc. (OUST)
OUST designs and sells lidar technologies for automation in industries, robotics, smart infrastructure, and vehicles. The San Francisco company went public through a reverse merger with blank check company Colonnade Acquisition Corp. on March 12, 2021.
On August 30, OUST unveiled its plans to expand its lidar technology to the Middle East. The company is currently working with distributors in the region to meet its supply with the rising demand for mechanization. The Middle Eastern expansion provides OUST with new opportunities for its industrial services.
In June, OUST received Buy America and Buy American certifications for lidar sensors manufactured in its San Francisco facility. These certifications imply that OUST can provide service to federally funded agencies.
In its fiscal second quarter, ended June 30, OUST’s total revenue increased 71.9% year-over-year to $7.36 million. This rise can be attributed to a 221.4% year-over-year increase in product revenue. In addition, the company’s gross profit increased 382.2% from the same period last year to $1.90 million. In the first half of its fiscal year 2021, its cash, cash equivalents, and restricted cash rose 1,758% year-over-year to $241.43 million as of June 30.
A $82.82 million consensus revenue estimate for the next year reflects a 145.8% year-over-year increase. The stock has gained 4.2% in price intraday to close yesterday’s trading session at $8.73.
Each of the three Wall Street analysts that rated OUST have rated it Buy. The 12-month median price target of $18.00 indicates a 106.2% potential upside. The price targets range from a low of $16.00 to a high of $20.00.
Velodyne Lidar, Inc. (VLDR)
VLDR provides lidar sensor technologies for autonomous vehicles, drones, mapping and robotics solutions, and the driver assistance software Vella™. The San Jose, Calif., company went public on September 30, 2020, through a reverse merger with Graf Industrial Corp.
On August 31, VLDR collaborated with Portugal-based robotics company MOV.AI regarding using the former’s Puck™ lidar sensors on the latter’s Robotics Engine Platform™ to produce Autonomous Mobile Robots (AMR). Regarding the partnership, Erich Smidt, Executive Director of Europe, VLDR, said, “Partnering with MOV.AI can enable us to bring safety, efficiency and sustainability into the industrial sector on a large, global scale.”
On August 25, VLDR partnered with Renu Robotics, a Texas-based robotics company that specializes in vegetation management using Puck™ sensors in a fully automated electric mower Renubot. After a competitive product review, the sensors were selected to highlight the superior quality that VLDR manufactures in its products.
In July, VLDR partnered with NVIDIA Corporation (NVDA) on its NVIDIA Metropolis Platform for using lidar sensors to prevent road accidents and increase safety.
VLDR’s Product revenue increased 4.8% year-over-year and 13% sequentially to $11.97 million in its second fiscal quarter ended June 30. This can be attributed to renewed demand for lidar sensors. Its ending cash and cash equivalents rose 107.7% from the prior-year quarter to $76.08 million. In the fiscal half-year ended June 30, its net cash provided by financing activities increased 140.9% year-over-year to $69.20 million.
Analysts expect VLDR’s revenue to improve 98.6% year-over-year to $155.67 next year (fiscal 2022). The stock has gained 1.6% in price intraday to close yesterday’s trading session at $6.73.
Of the three Wall Street analysts that rated VLDR, two rated it Buy, while three rated it Hold. The 12-month median price target of $13.80 indicates a 105.1% potential upside. The price targets range from a low of $9.00 to a high of $30.00.
OUST shares were trading at $8.47 per share on Thursday afternoon, down $0.26 (-2.98%). Year-to-date, OUST has declined -37.26%, versus a 21.99% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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