D-Wave Quantum stock price target raised to $22 from $20 at B.Riley

B.Riley increased its price target for D-Wave Quantum Inc. (NYSE: QBTS) to $22 from $20, maintaining a Buy rating, following the company's impressive 1,528% stock return over the past year and an increased valuation multiple. Despite B.Riley forecasting Q1 2025 revenue below consensus due to a tough comparison for Advantage system revenue recognition, underlying Services and Quantum Computing as a Service (QCaaS) sales are expected to remain stable. The company's strong liquidity, bolstered by an $815 million cash position after a recent $400 million at-the-market offering, provides over four years of runway to profitability, supported by strategic partnerships and positive analyst sentiment from other firms.

Analysis

D-Wave Quantum Inc. (QBTS) has received a notable vote of confidence from B.Riley, which raised its price target to $22.00 from $20.00 while reiterating a Buy rating. This revision is based on an increased valuation multiple applied to the company's long-term total addressable market, reflecting strong optimism following the stock's 1,528% return over the last year. While B.Riley's Q1 2025 revenue forecast of $2.0 million is below the consensus estimate of $2.54 million, this is attributed to a challenging year-over-year comparison for its Advantage system revenue, with underlying Services and Quantum Computing as a Service (QCaaS) sales expected to show stability. The company's financial position appears exceptionally robust, with an $815 million cash balance following a recent $400 million offering and $95.8 million from warrant exercises. This liquidity, against a manageable $11 million operating cash burn, provides a runway of over four years to achieve profitability, supported by a strong current ratio of 20.7. The positive sentiment is echoed by other analysts, including a new Overweight rating from Cantor Fitzgerald and a price target increase from Benchmark, further bolstered by a strategic partnership in South Korea to expand its technological footprint.

Key Decisions for Investors

• Investors should look past the anticipated near-term revenue decline, which is attributed to a tough comparison for hardware sales, and focus on the stability of recurring QCaaS and Services revenue as a key indicator of core business health.
• The company's strong liquidity, with an $815 million cash position and a runway exceeding four years, significantly de-risks its path to profitability and should be a central factor in assessing its long-term investment thesis.
• While analyst sentiment from B.Riley, Cantor Fitzgerald, and Benchmark is bullish, investors should consider the stock's monumental 1,528% one-year gain and weigh the strong growth outlook against potential valuation risks.
• Monitor progress on the strategic partnership in South Korea and the adoption of the Advantage2 system, as these are critical milestones for validating the company's market expansion and technological leadership narrative.