D-Wave Quantum: B. Riley Raises Buy Rating, PT to $22 from $20

D-Wave Quantum: B. Riley Raises Buy Rating, PT to $22 from $20

In a significant move for the quantum computing sector, B. Riley has raised its price target for D-Wave Quantum Inc. (NYSE: QBTS) from $20 to $22, while maintaining a Buy rating. This upgrade comes on the heels of impressive performance and strategic developments for the company.

D-Wave Quantum has experienced remarkable momentum, with a 191% surge over the past six months and an impressive 1,528% return over the last year [2]. The firm has increased its valuation multiple from 0.8x to 0.9x of the five to fifteen year total addressable market (TAM), leading to the 10% price target increase [2].

B. Riley expects D-Wave to report revenue of $2.0 million and earnings per share of ($0.07) for the current quarter, compared to the consensus estimates of $2.54 million and ($0.08), respectively [2]. The anticipated steep quarter-over-quarter revenue decline of 86.7% reflects what the firm describes as a tough first-quarter 2025 comparison for Advantage system revenue recognition, while underlying Services and Quantum Computing as a Service (QCaaS) sales are expected to remain more stable [2].

The firm notes that D-Wave's operating cash burn of $11 million remains manageable, with an $815 million cash position following June’s $400 million at-the-market offering [2]. This provides more than four years of runway to profitability at what the firm expects will be normalized mid-70s gross margin levels [2].

Recent developments highlight D-Wave Quantum's ongoing efforts to expand its financial and technological footprint. The company has completed a significant $400 million equity offering, with shares sold at an average price of $15.18 per share [2]. This offering achieved a 149% premium compared to a previous offering in January [2]. Additionally, D-Wave reported raising approximately $95.8 million through the exercise of warrants, with 8.33 million warrants exercised at $11.50 each [2].

On the analyst front, Cantor Fitzgerald initiated an Overweight rating for D-Wave Quantum, setting a price target of $20, and Benchmark also raised its price target for the company to $20 from $14, maintaining a Buy rating [2]. The price target increase follows D-Wave’s announcement of a partnership with South Korea’s Yonsei University and Incheon Metropolitan City. This collaboration aims to advance quantum computing adoption in the region, with plans for a D-Wave Advantage2 quantum computing system at Yonsei University’s International Campus [2].

These developments underscore D-Wave Quantum's strategic positioning and growth potential in the quantum computing sector.

References:
[1] https://finance.yahoo.com/news/b-riley-initiates-coverage-cleanspark-151328872.html
[2] https://www.investing.com/news/analyst-ratings/dwave-quantum-stock-price-target-raised-to-22-from-20-at-briley-93CH-4148331