Rigetti Computing (RGTI) Stock: Why Jefferies Warns Investors to Wait and Watch

TLDR

• Jefferies issued a Hold rating on Rigetti Computing, calling it a “wait-and-watch” situation with risks outweighing near-term opportunities
• Rigetti’s revenue declined 37% over the last twelve months, with analysts forecasting another 30% drop this year
• The company trades at a $7.77 billion market cap against just $7.49 million in trailing twelve-month revenue
• Nine analysts cover the stock with a Moderate Buy consensus: six Buys and three Holds
• Jefferies highlights strong liquidity but warns about heavy dependency on government contracts limiting visibility

Rigetti Computing is getting mixed signals from Wall Street as analysts try to figure out if the quantum computing company’s sky-high valuation makes any sense.

Rigetti Computing, Inc., RGTI

Jefferies recently slapped a Hold rating on the stock, telling investors this is a “wait-and-watch” situation. The investment bank’s message was pretty clear: the risks are bigger than the opportunities right now.

The numbers tell a rough story. Rigetti’s revenue dropped 37% over the last twelve months, according to InvestingPro data. That’s not just a bad quarter – that’s a serious decline.

Analysts aren’t expecting things to get better anytime soon. Forecasts predict another 30% revenue drop this year. For a company trying to prove itself in the quantum computing space, those numbers raise eyebrows.

Valuation Questions Pile Up

Here’s where things get really interesting. Rigetti has a market capitalization of $7.77 billion. The company’s trailing twelve-month revenue? Just $7.49 million.

That means investors are valuing the company at more than 1,000 times its actual revenue. The market is clearly betting on massive future growth rather than current performance.

Jefferies acknowledged the company has strong liquidity, which means it has enough cash to keep operating. But the investment bank pointed out a big problem: Rigetti relies heavily on government contracts.

That dependency creates limited visibility into future revenue. Government contracts can be unpredictable and don’t always provide a stable growth path.

What Other Analysts Think

The consensus rating is Moderate Buy. Six analysts have Buy ratings on the stock, while three recommend holding it. No analysts are telling investors to sell.

Jefferies expects Rigetti to benefit from quantum computing as a service (QCaaS) conversions. That’s the business model where companies pay to access quantum computing power rather than building their own systems.

But the investment bank still views Rigetti as higher risk compared to other companies in the quantum computing space. The valuation premium means there’s a lot of optimism already baked into the stock price.

If Rigetti misses growth expectations, the stock could face serious pressure. The current price assumes the company will overcome its revenue challenges and deliver massive growth.

Jefferies noted the risks outweigh near-term opportunities for now. That’s why the firm is telling investors to watch and wait rather than jump in. The government contract dependency remains a key concern limiting the company’s revenue visibility.

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