Why Ouster Stock Is Soaring Today

What happened

Shares of Ouster (NYSE: OUST), a maker of digital lidar sensor systems, were trading sharply higher on Wednesday afternoon after a Wall Street analyst initiated coverage with a bullish note.

As of 2 p.m. EDT, Ouster's shares were up about 35.6% from Tuesday's closing price.

So what

In a new note released on Wednesday morning, Citibank analyst Itay Michaeli initiated coverage of Ouster with a buy rating and a price target of $17.

Michaeli wrote that the company appears particularly well positioned in comparison to other newly public lidar makers because of its "unique" digital sensors and its leading position in vertical markets outside of autos.

Ouster sells its lidar sensors packaged with software optimized for a variety of industrial and robotics applications, in addition to its offerings for automobiles and heavy trucks.

An Ouster lidar sensor, pictured with a mining operation in the background.

Ouster already has hundreds of customers for its lidar sensors, including Waytous, a maker of autonomous mining equipment. Image source: Ouster.

Lidar, short for laser detection and ranging, is increasingly used in advanced driver-assist systems and is considered essential by most experts in self-driving vehicles.

Now what

Michaeli thinks Ouster's share price is "disconnected" from its standing in the industry. Despite the fact that the company just went public last month, investors should realize that it's not a start-up: Ouster already has hundreds of customers for its products.

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John Rosevear has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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