Baird shifts to the sidelines on Ouster amid macro, merger uncertainty (NYSE:OUST)

Ouster (NYSE:OUST) inventory slid sharply on Wednesday after Baird downgraded the inventory attributable to low visibility into 2023.

Fairness analyst Tristan Gerra cited a weakening macro backdrop for the downgrade from a Purchase-equivalent to Impartial and a scarcity of visibility into 2023. Whereas a proposed merger with Velodyne Lidar (NASDAQ:VLDR) is seen as a possible profit to the corporate’s money place, it may additionally add to points for the corporate within the nearer time period and shares too comparable a product portfolio.

“Downgrading OUST on a weak macro outlook, not on firm fundamentals,” Gerra clarified. “Nonetheless, Velodyne may add a income and gross margin burden within the medium time period, in our view.”

Velodyne is seen as carrying extra points than advantages for Ouster. Gerra indicated that the merger could deliver a declining enterprise on board with Ouster quite than a accomplice in progress, the evaluation mentioned.

“We be aware Velodyne has misplaced important design wins since going public, with income this 12 months anticipated to be simply above one-third of 2020 run charges,” Gerra famous. “Velodyne notably has misplaced automotive design wins, whereas Amazon has positioned its Scout home-delivery undertaking on maintain.”

Shares of Ouster (OUST) skidded 12.4% and Velodyne inventory slumped 9.04%.

Learn extra on Ouster’s newest earnings launch.