Diverging Analyst Views Cast Shadow Over Rigetti’s Stellar Run

Rigetti Computing found itself under the investor microscope this Wednesday, though for reasons that tempered recent enthusiasm. Despite shares having surged more than 300% year-to-date, a newly initiated and cautious analyst rating has introduced a note of skepticism to the narrative.

The focus stems from investment bank Jefferies commencing coverage of the quantum computing firm with a "Hold" rating and a $30 price target. This stance presents a stark contrast within the same research report, where competitors IonQ and D-Wave received "Buy" recommendations. The implied message from Jefferies is that Rigetti currently lags in the competitive sector landscape.

Analyst Kevin Garrigan at Jefferies cited execution risks and a significant reliance on government contracts as the primary reasons for his reserved outlook. While the $30 price objective sits approximately 25% above Tuesday's closing price of $23.96, the "Hold" designation clearly advises investors to adopt a wait-and-see approach.

Financial Performance Underwhelms

This analyst skepticism is grounded in recent financial results. For the third quarter, Rigetti generated revenue of just $1.95 million. This figure represents an 18% decline from the prior year and fell notably short of the $2.17 million analysts had anticipated. More concerning was the net loss, which ballooned to over $200 million, compared to a loss of nearly $15 million in the same period last year.

Should investors sell immediately? Or is it worth buying Rigetti?

The company's valuation appears stretched relative to its current operational scale. With a market capitalization around $7.9 billion and a price-to-sales ratio nearing 992 (based on trailing twelve-month revenue), a substantial gap exists between its market price and business fundamentals. Even projected revenues for 2027 would imply a P/S multiple of 177—a valuation that seems to price in decades of flawless execution.

Insider Sales and Market Uncertainty

Adding to the cautious picture, corporate insiders have been selling shares during the price ascent. Chief Financial Officer Jeffrey Bertelsen disposed of 3,702 shares in November. Earlier, in mid-October, director Helene Sandford sold 62,000 shares at $44.89 each—a price nearly double the current trading level. Such activity is often scrutinized by the market as a potential signal.

The uncertainty surrounding Rigetti's fair value is further highlighted by a lack of consensus among research firms. While Jefferies sets its target at $30, Mizuho Securities assigned a $50 price target in early December. This $20 spread underscores the market's ongoing struggle to pinpoint appropriate valuations within the emerging quantum computing sector.

From a technical perspective, the stock is currently trading between $22.69 and $24.37. A break below the $22 support level could trigger further selling pressure, whereas the Jefferies target of $30 now serves as a key overhead resistance point. Investors are likely to focus on the upcoming fourth-quarter earnings report on February 19th. Without clear progress in commercial revenue generation, the rationale for the stock's premium valuation may continue to weaken.