Analyst: buy Rigetti stock as it warms up to blow past its May high

Cantor Fitzgerald analyst Troy Jensen issued a bullish note on Rigetti Computing (RGTI), recommending a buy with a $15 price target, citing the company's leadership in superconducting quantum computing and its relative valuation advantage over peers. This positive outlook is underpinned by Rigetti's recent $35 million strategic investment from Quanta Computer, improved Q1 financials with reduced losses, and its central role in government-funded projects, positioning it for growth in the nascent, high-potential quantum computing sector. While RGTI shares are down nearly 40% year-to-date, the stock gained on the news, aligning with a broader Wall Street 'buy' consensus.

Analysis

A bullish research note from Cantor Fitzgerald has positioned Rigetti Computing (RGTI) for a potential recovery, setting a $15 price target despite the stock's near 40% year-to-date decline. The core of the thesis rests on RGTI's leadership in the superconducting subsector of quantum computing, which the analyst identifies as a high-potential, albeit nascent, industry. This positive outlook is supported by several fundamental developments: the company's Q1 loss narrowed significantly to 8 cents per share from 14 cents year-over-year, and it secured a strategic $35 million investment from Quanta Computer. Furthermore, Rigetti's balance sheet appears robust, with $238 million in cash and investments against quarterly operating expenses of approximately $22 million, suggesting a lengthy runway for R&D and operations. From a valuation perspective, the analyst notes that while RGTI's price-to-sales multiple is over 300, it remains cheaper than peers like D-Wave, which trades at a multiple of 484. The company's selection for key government projects in the US and UK provides further validation, aligning with a broader Wall Street consensus 'buy' rating and a mean price target of $14.57.

Key Decisions for Investors

• Investors with a high-risk tolerance for early-stage technology could view the recent analyst upgrade and the stock's significant year-to-date underperformance as a potential entry point into a leader in the superconducting quantum sector.
• Consider the relative valuation argument; while speculative, RGTI's price-to-sales multiple of over 300 is presented as more attractive than D-Wave's 484, offering a potential rationale for a long position in RGTI versus its peers.
• Closely monitor the company's cash burn rate relative to its $238 million in cash and investments, as sustained operational execution and progress on its technology roadmap will be critical to justifying the bullish long-term thesis.