On Friday, Needham reduced the stock price target for Rigetti Computing Inc . (NASDAQ:RGTI) to $2.00 from the previous $3.00, while reaffirming a Buy rating for the stock. The adjustment follows Rigetti's second-quarter 2024 revenue, which did not meet the expectations set by Needham's model. However, the company's gross margin (GM) exceeded forecasts due to a more favorable product mix.
Rigetti Computing is actively progressing on its technical roadmap. The company's 84-qubit Ankaa-3 system is anticipated to reach a median 2-qubit gate fidelity of 99+% by the end of the 2024 calendar year. This metric is crucial for the performance and reliability of quantum computing systems.
The firm's sales pipeline has expanded significantly compared to the previous year, bolstered by increased government budgets dedicated to quantum research. This growth in potential business opportunities is a positive sign for the company's future sales prospects.
Moreover, Rigetti's management is confident that the company possesses sufficient cash reserves to support its operations until midway through the first quarter of 2026. This assurance of financial stability is an important factor for investors considering the long-term viability of the company.
In summary, Needham's stance remains positive on Rigetti Computing's advancements in improving 2-qubit gate fidelity and adhering to its technology roadmap. Despite the reduced price target, the firm's outlook on the stock continues to be optimistic, reflecting a cautious but still constructive view on the company's trajectory.
In other recent news, Rigetti Computing, a key player in the quantum computing industry, has been making significant strides. The company has been slated to join the Russell 3000 Index at the start of the U.S. equity markets in July, a move that signifies its growing market capitalization and its role in the evolving U.S. economy. Rigetti's CEO, Dr. Subodh Kulkarni, has noted that this inclusion will enhance the visibility of both Rigetti and the quantum computing sector to a broader market.
In addition to this, Rigetti Computing has reported a 39% increase in first-quarter revenues for 2024, bringing in $3.1 million. The company has also made significant technological advancements, achieving a 99.3% median 2-qubit gate fidelity on their 9-qubit Ankaa class quantum system. Rigetti has expressed optimism about scaling this performance to their upcoming 84-qubit Ankaa 3 system by year's end and has outlined plans for a more advanced 336-qubit Lyra system.
Despite a decrease in gross margins from the previous year, the company managed to reduce its total operating expenses. With its cash reserves expected to sustain operations until mid-2025, Rigetti Computing continues to demonstrate its commitment to advancing quantum computing technology. These are the recent developments for Rigetti Computing.
InvestingPro Insights
InvestingPro data highlights several key financial metrics for Rigetti Computing Inc. (NASDAQ:RGTI) that potential investors should consider. The company's market capitalization currently stands at approximately $142.78 million, indicating its size within the market.
Despite a challenging environment, Rigetti has maintained a gross profit margin of 70.12% over the last twelve months as of Q1 2024, showcasing its ability to retain a substantial portion of its sales revenue after accounting for the cost of goods sold. Additionally, the company has experienced a quarterly revenue growth of 38.66% in Q1 2024, suggesting a potential rebound or growth phase.
Two InvestingPro Tips provide further insight into Rigetti's financial health. Firstly, the company holds more cash than debt on its balance sheet, which is a positive sign of financial stability and may provide a cushion against future uncertainties. However, it is important to note that the company is quickly burning through cash, which could raise concerns about its long-term sustainability if not managed effectively. For investors seeking more comprehensive analysis, there are 10 additional InvestingPro Tips available that could help in making a more informed decision about the stock.
It is also worth noting that Rigetti does not pay dividends to shareholders, which could be a consideration for those looking for income-generating investments. The recent price movements have been quite volatile, with the stock price taking a significant hit over the last six months, as reflected by a 33.56% decline. This may attract investors looking for a potential turnaround opportunity or those with a higher risk tolerance.
For a deeper dive into Rigetti's financials and performance, interested parties can explore further by visiting InvestingPro for additional tips and real-time data.
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