Is Trending Stock Rigetti Computing, Inc. (RGTI) a Buy Now?

Rigetti Computing (RGTI) is trending on Zacks.com, but its recent performance lags the S&P 500 and its industry. While the current quarter loss per share is expected to improve year-over-year, revenue is projected to decline 38.2%, and the company's last reported quarter showed a 51.8% revenue decrease with significant misses on consensus estimates; furthermore, Rigetti's Zacks Rank is #4 (Sell), indicating potential underperformance in the near term, and its Value Style Score is F, suggesting it's trading at a premium relative to peers.

Analysis

Rigetti Computing, Inc. (RGTI) has underperformed recently, with its shares declining 2% over the past month, contrasting with the S&P 500 composite's 6.3% gain and its own Zacks Internet - Software industry's 14.2% rise. While the company is expected to report a narrower loss of $0.06 per share for the current quarter, a 14.3% year-over-year improvement, its revenue outlook is concerning. Current quarter consensus sales are projected at $1.91 million, a significant 38.2% year-over-year decrease, and current fiscal year revenue is estimated at $8.78 million, down 18.6%. This follows a last reported quarter where revenues of $1.47 million were down 51.8% year-over-year, missing consensus estimates by 40.16%, and EPS of -$0.08 also missed estimates by 60%. Over the last four quarters, Rigetti has surpassed EPS estimates only once and has failed to beat revenue consensus in any of those periods. Despite a projected +204.8% revenue growth for the next fiscal year, the current fiscal year earnings estimate has been revised downwards by 13% over the last 30 days, and the next fiscal year's consensus EPS of -$0.18 represents a 260% deterioration from the current year's expected loss. Reflecting these challenges, Rigetti holds a Zacks Rank #4 (Sell) and a Value Style Score of F, indicating it trades at a premium relative to its peers despite weak fundamentals and recent estimate revisions.

Key Decisions for Investors

• Given the Zacks Rank #4 (Sell), recent share underperformance, significant revenue declines, and poor earnings surprise history, investors should exercise caution and may consider reducing exposure to RGTI.
• The company's F grade for Value Style Score suggests the stock is overvalued relative to peers, warranting a careful assessment of its current price against its intrinsic value, especially in light of negative revenue trends.
• While the projected 204.8% revenue growth for the next fiscal year might appear attractive, the substantial negative revisions to current year earnings and the sharply deteriorating EPS forecast for the next fiscal year signal significant execution risks that investors should monitor closely before considering any long positions.