TLDR
- Rigetti Computing stock jumped 15.5% after Cantor Fitzgerald initiated coverage with Overweight rating and $15 price target
- The investment bank sees potential for another 20% upside over the next 12 months despite company’s current losses
- Rigetti operates in quantum computing sector competing against tech giants like Google, IBM, Intel and Microsoft
- Company has only $9 million in annual revenue with no profits, trading at 273 price-to-sales ratio
- Options market shows bullish sentiment with increased call volume ahead of August 7th earnings report
Rigetti Computing stock caught fire Wednesday, closing up 15.5% at $13.08 after Cantor Fitzgerald threw its weight behind the quantum computing company. The investment bank initiated coverage with an Overweight rating and slapped a $15 price target on the stock.
That price target suggests another 20% upside potential over the next year. Not bad for a company that’s still burning through cash faster than it can generate revenue.
Cantor Fitzgerald’s analysts painted quantum computing as one of the most coveted technical milestones. They called it a field with “enormous economical implications” despite being in its infancy.
The timing seems curious given Rigetti’s financial reality. The company pulled in just $9 million in annual revenue last year. Meanwhile, it’s carrying a market cap of around $4 billion.
Those numbers create a price-to-sales ratio of 273. That’s the kind of multiple that makes even the most optimistic growth investors squirm a little.
David vs. Goliath in Quantum
Rigetti finds itself swimming with some serious heavyweights. Alphabet, IBM, Intel, and Microsoft all have quantum computing divisions with much deeper pockets.
But Cantor sees this as potentially good news for the smaller player. The bank suggested Rigetti might benefit from the advances made by these larger companies.
The quantum computing space remains largely theoretical for now. Cantor admitted the industry is “likely years away from full-scale quantum capabilities.”
That hasn’t stopped investors from betting on the future. The options market shows increased call volume, suggesting traders expect more upside ahead.
Numbers Don’t Lie
The financial picture tells a stark story. Rigetti’s gross margin sits at negative 15.18%, meaning the company loses money on every dollar of revenue.
Most analysts don’t see profitability coming anytime soon. Earnings estimates don’t show the company turning a profit before 2030.
The stock trades at what Cantor itself called a “steep” multiple to any near-term revenue or earnings forecast. That’s financial speak for “expensive.”
Trading volume spiked to over 1 million shares Wednesday, well above the average daily volume of 48.5 million shares. The stock has been volatile, down 43.35% year-to-date despite Wednesday’s pop.
Rigetti’s 52-week range spans from $0.66 to $21.42, showing just how wild the ride has been. The company’s technical sentiment signal currently reads as a buy.
All eyes turn to August 7th when Rigetti reports earnings. Analysts remain cautious about the stock’s performance heading into that date.
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