Wall Street Analysts Bullish on Rigetti (RGTI) at $15, But AI Analyst Holds a Contrary View

Rigetti Computing (RGTI) has a Strong Buy consensus from 6 analysts with a $15 price target, implying an 11.5% upside from the current price. However, TipRanks' AI-powered analyst, Spark, holds a Hold rating with a $13.50 price target and a stock score of 55, citing pressure on current financial performance, revenue decline, and negative free cash flow. Analysts are optimistic about long-term growth and new commercial traction, while Spark focuses on current financial metrics.

Rigetti Computing (RGTI) has been in the spotlight following Cantor Fitzgerald analyst Troy Jensen's initiation of coverage with an "Overweight" rating and a $15 price target [1]. This rating comes amidst a broader consensus among analysts that sees RGTI as a promising investment in the quantum computing sector. However, there are differing opinions regarding the stock's current valuation and potential risks.

Cantor Fitzgerald analyst Troy Jensen expects RGTI shares to hit $15 in the coming months, citing the company's leadership in superconducting systems and its recent $35 million equity investment from Quana Computer [1]. Additionally, Jensen highlights Rigetti's collaborations with governments on both sides of the Atlantic and its progress in scaling qubit count systems. Despite its high price-to-sales (P/S) ratio of over 300x, Jensen believes RGTI is relatively inexpensive compared to its rivals, such as D-Wave (QBTS), which has a P/S ratio of close to 500x [1].

Wall Street analysts have shown strong interest in RGTI, with an average one-year price target of $14.80, indicating a significant upside of 30.74% from the current trading price of $11.32 [2]. The consensus rating on RGTI shares is "Outperform," with an average brokerage recommendation score of 2.0 [2]. However, GuruFocus presents a more conservative view, estimating a GF Value of $0.80 for RGTI in one year, indicating a potential downside of 92.93% from the current price [2].

In contrast, TipRanks' AI-powered analyst, Spark, holds a Hold rating with a $13.50 price target and a stock score of 55 [3]. Spark focuses on current financial performance, noting pressure on RGTI's financial metrics, including revenue decline and negative free cash flow. While Spark acknowledges the long-term growth potential and new commercial traction in the quantum computing sector, it advises caution due to the stock's speculative nature and high volatility.

Rigetti Computing's recent financial performance has been mixed. The company reported a net income of nearly $43 million in its latest quarter but also recorded about $22 million in operating expenses [1]. However, its cash position remains strong, with $238 million in cash, cash equivalents, and available-for-sale investments [1]. Despite these positive indicators, the company's revenues are projected to be around $11 million next year, with a market cap of $2.5 billion, raising concerns about its profitability and sustainability [3].

The quantum computing sector is currently in a hype cycle, with experts cautioning against options trading and recommending profit-taking amidst high volatility [3]. Nvidia CEO Jensen Huang has expressed skepticism about the sector's immediate profitability, stating that quantum computing has a long way to go and that the stocks are overvalued [3]. While there is potential for significant returns in the long term, the consensus is that Rigetti is currently in a risky and speculative position.

In conclusion, while analysts are optimistic about Rigetti Computing's long-term growth prospects, there are differing opinions regarding its current valuation and potential risks. Investors should carefully consider both the bullish and bearish views before making investment decisions.

References:
[1] https://finance.yahoo.com/news/why-analyst-thinks-rigetti-computing-181923559.html
[2] https://www.gurufocus.com/news/2957329/rigetti-computing-rgti-receives-overweight-rating-from-cantor-fitzgerald
[3] https://stockchase.com/RGTI-Q