On Friday, Craig-Hallum maintained a Buy rating on shares of D-Wave Quantum (NASDAQ:QMCO) Inc. (NYSE: QBTS), currently trading at $6.66, while significantly raising the price target from $2.50 to $9.00.
The firm’s analyst cited a recent surge in interest for quantum computing stocks, propelled by retail investors, as a key factor in the decision. The stock has demonstrated remarkable momentum, with InvestingPro data showing a 577% return over the past year.
The analyst pointed out that the market had previously overlooked the potential of quantum computing, much like it had with artificial intelligence until a sudden realization in the spring of 2023. They believe that investors are now trying to get ahead of what might be the next major advancement in computing technology.
According to InvestingPro’s analysis, while QBTS shows strong price momentum, it currently appears overvalued relative to its Fair Value estimates. Subscribers can access 10+ additional ProTips and comprehensive valuation metrics.
Despite the sharp increase in valuation for quantum computing companies, with enterprise values (EVs) ranging from $1 billion to $8 billion, these figures remain modest when compared to the market capitalizations of traditional computing firms, which exceed $1 trillion.
D-Wave currently commands a market capitalization of $1.47 billion, though InvestingPro data indicates the company is not yet profitable, with an EBITDA of -$72.51 million in the last twelve months. These established companies could face disruption from emerging quantum computing technologies.
Additionally, the analyst highlighted the limited availability of quantum computing plays in public markets, which adds a scarcity value to the shares of companies like D-Wave Quantum. This scarcity, combined with the transformative potential of quantum computing, underpins the analyst’s positive stance on D-Wave Quantum’s long-term prospects.
In summary, Craig-Hallum’s updated price target reflects a belief in the sustained interest and future growth potential of quantum computing stocks, particularly for long-term investors. The firm advises that while the current market enthusiasm carries risks, the long-term outlook for companies like D-Wave Quantum remains favorable.
In other recent news, D-Wave Quantum Inc. has maintained its SOC 2 Type 2 compliance, emphasizing its commitment to customer data security. This achievement follows the successful completion of its audit conducted by A-LIGN.
In parallel, D-Wave has raised $175 million through equity offering programs, strengthening its financial position. The company anticipates ending the fourth quarter of 2024 with at least $160 million in cash.
However, the firm reported a 27% decline in overall revenue to $1.9 million in its Q3 2024 earnings call, although its core Quantum Computing as a Service (QCaaS) segment saw a 41% increase. In board-related news, D-Wave has seen the resignation of Ziv Ehrenfeld and the strategic appointment of tech industry veteran Sharon Holt.
Meanwhile, Quantum Computing Inc. found itself the target of Citron Research’s critique. Citron questioned Quantum Computing’s research and development spending, suggesting a mismatch between the company’s financials and its claim to offer high-performance quantum systems.
Despite this, Quantum Computing’s shares rose by 26%, demonstrating resilience in the face of criticism. These are the recent developments in the quantum computing sector.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.