Rigetti Computing stock price target raised to $19 from $15 by B.Riley

B.Riley raised its price target on Rigetti Computing (RGTI) to $19 from $15, maintaining a Buy rating, driven by an increased long-term serviceable addressable market multiple and anticipated technical advancements in qubit scalability and error correction. This upgrade follows Rigetti's recent achievement of 99.5% two-qubit gate fidelity on its modular 36-qubit system, significantly reducing error rates, and the unveiling of the industry's largest multi-chip quantum computer. Despite a 1,200%+ annual return and an InvestingPro 'overvalued' assessment, the firm projects $1.9M revenue in line with consensus, while noting government funding remains a near-term revenue recognition issue with potential legislative solutions.

Analysis

Rigetti Computing (RGTI) has received positive analyst coverage, with B.Riley raising its price target to $19.00 from $15.00 and Cantor Fitzgerald initiating with an 'Overweight' rating and a $15.00 target. The B.Riley upgrade is underpinned by an increased long-term serviceable addressable market (SAM) multiple, from 0.24x to 0.3x, reflecting confidence in future technical advancements. This optimism is supported by Rigetti's significant operational milestone: achieving 99.5% median two-qubit gate fidelity on its new modular 36-qubit system, a twofold reduction in the error rate from its previous generation. However, this positive long-term outlook is contrasted by near-term financial realities and valuation concerns. The stock has appreciated over 1,200% in the past year, leading to an 'overvalued' assessment by InvestingPro. Furthermore, projected revenue of $1.9 million and an EPS loss of ($0.06) highlight the company's early stage, with revenue heavily reliant on collaborative research (94%). A key near-term risk is the dependency on government funding, with revenue recognition tied to the potential passage of legislation such as the $2.7 billion National Quantum Reauthorization Act.

Key Decisions for Investors

• Investors should weigh the bullish analyst sentiment and significant technical milestones against the stock's 1,200% annual return and 'overvalued' signals, suggesting potential valuation risk at current levels.
• Monitor progress towards key technical goals, specifically qubit module scalability reaching 100+ by year-end 2025, as this is a core component of the long-term investment thesis presented by analysts.
• Closely track the status of US government funding legislation, such as the National Quantum Reauthorization Act, as its passage is a critical near-term catalyst for revenue recognition and de-risking the company's financial outlook.