The tech industry has seen steady growth in the past decade. However, the Fed’s rate hikes to combat inflation is keeping the industry under pressure. So, tech stocks, Ouster, Inc. (OUST) and Integrated Media Technology Limited (IMTE), which have been slumping in price, might be best avoided.
According to International Data Corporation (IDC), worldwide IT spending is forecast to slow down in 2023 as high-interest rates affect companies’ budgets.
“Since the fourth quarter of last year, we have seen clear and measurable signs of a moderate pullback in some areas of IT spending,” Stephen Minton, vice president at the IDC’s data and analytics research group, wrote.
Moreover, companies that rely on global supply chains for their products and components are encountering interruptions due to trade conflicts and shipping delays.
In addition, there have been 168,243 layoffs so far in 2023 based on all complete months, and its higher than the overall number of tech layoffs in 2022.
The rising recession fears might lead to further challenges for the tech sector, limiting spending and demand.
Let’s delve deeper into the fundamentals of the stocks.
Ouster, Inc. (OUST)
OUST designs and manufactures high-resolution digital lidar sensors and enabling software that offers 3D vision to machinery, vehicles, robots, and fixed infrastructure assets. Its product range includes OS, a scanning sensor, and DF, a true solid-state flash sensor.
OUST’s trailing-12-month asset turnover ratio of 0.15x is 76.3% lower than the 0.61x industry average. Its trailing-12-month gross profit margin of 26.64% is 46% lower than the 49.32% industry average.
OUST’s loss from operations increased 418% year-over-year to $177.10 million in the fiscal first quarter that ended March 31, 2023. Its adjusted EBITDA loss came in at $26.89 million, up 19.2% year-over-year. Also, its net loss rose 447.2% year-over-year to $177.28 million and net loss per share grew 217.4% from the prior-year quarter to $6.03.
Analysts expect OUST’s EPS to come in at negative $4.75 million in 2023.It missed EPS estimates in all the four trailing quarters. The stock has lost 83.8% over the past year to close its last trading session at $3.84.
OUST’s POWR Ratings reflect this poor outlook. The stock has an overall rating of F, equating to a Strong Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
OUST is also graded an A for Stability, Sentiment and Quality and a D in Growth. It is ranked #36 out of 39 stocks in the D-rated Technology - Electronics industry. In addition to the POWR Ratings stated above, OUST’s grades for Value, and Momentum can be seen here.
Integrated Media Technology Limited (IMTE)
Based in Wanchai, Hong Kong, IMTE offers laminated switchable glass, nano-coated plate filter, air filter, and Internet of Things (IoT) products.
IMTE’s trailing-12-month asset turnover ratio of 0.01x is 97.9% lower than the 0.61x industry average. Its trailing-12-month ROCE of negative 47.53% is lower than the 0.72% industry average.
For the full year that ended December 31, 2021, IMTE’s total expenses increased 141.5% year-over-year to A$14.83 million ($2.19 thousand). Its loss for the year rose 110.5% year-over-year to A$13.86 million ($4.77 million). Moreover, its loss per share grew 10% year-over-year to A$0.77.
Over the past year, the stock has lost 89.1% to close the last trading session at $0.54.
IMTE’s bleak fundamentals are reflected in its POWR Ratings. The stock has an overall rating of F, which equates to a Strong Sell in our proprietary rating system.
It is ranked #37 in the same industry. It has an F grade for Value, Stability and Quality and a D for Momentum. To see additional IMTE’s rating for Sentiment, and Growth, click here.
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OUST shares were trading at $4.60 per share on Friday morning, up $0.76 (+19.79%). Year-to-date, OUST has declined -46.70%, versus a 7.98% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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