Rigetti Computing Improving Gate Fidelity Would Make It Viable Acquisition Target: Analyst

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  • Needham analyst Quinn Bolton maintained Rigetti Computing Inc RGTI with a Buy and lowered the price target from $3 to $1.
  • RGTI slightly beat 2022 sales expectations but provided no 2023 sales guidance. Sales of $6.1 million surpassed Bolton's $3.4 million estimate and the $4.4 million consensus. 
  • FY22 sales of $13.1 million slightly surpassed guidance of $12 million - $13 million, consistently reiterated throughout the year. 
  • RGTI maintained a cash balance of $143 million at year-end or $1.00 of net cash per share.
  • The new management team highlighted improving 2-qubit gate fidelity to 98% in 2023 and 99% in 2024; and managing the 2023 year-end cash balance to $65 million - $75 million (no additional funding until at least late-2024). 
  • The analyst thinks improving fidelity will attract willing investors when funding is needed, making the company a viable acquisition target. 
  • Bolton applauded management's frankness about the new technological and operational strategies and believes these are necessary steps for the long run. 
  • The stock is trading at ~1/2 net cash levels.
  • Price Action: RGTI shares traded higher by 4.36% at $0.57 on the last check Tuesday.
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