Citi downgrades Ouster on risks after planned merger, demand concerns

Luminar Technologies

07/12/2022 13:00

** Citigroup downgrades Ouster Inc  OUST.N  to "neutral" from
"buy", citing concerns after the lidar sensor maker's planned
merger with peer Velodyne Lidar Inc  VLDR.O 
    ** Citi also cuts PT on OUST to $1.7 from $10; says while
the brokerage is not bearish on the merger, it introduces
integration risks in 2023
    ** Brokerage says it views the merger "as largely a "Plan B"
for Ouster, with the primary benefit coming from extending the
company's liquidity runway with Velodyne's cash position"
    ** Believes the absence of backlog visibility in OUST's
recent results also raises demand concerns
    ** Brokerage also cuts PT on VLDR to $1.30 from $1.70 given
a competitive environment, but sees revenue and cost benefits
from merger with Ouster
    ** Also lowers PT on Luminar Technologies  LAZR.O  
    ** VLDR is up 1.9% premarket while OUST and LAZR are down
0.8% and 1.8%, respectively, in light premarket trading
    ** Up to last close, OUST and VLDR have slumped over 75%
each YTD while LAZR has fallen 56.5%
 (Reporting by Amruta Khandekar)
 ((Amruta.Khandekar@thomsonreuters.com;))