IonQ (NYSE:IONQ) is a quantum computing hardware and software company and front-runner in the highly specialized quantum computing field. Its unique trapped ion quantum computer pushes the boundaries of technology. Having surpassed both its technology and financial goals in 2023, the company looks to 2024 with an optimistic outlook, bolstered by an expanding client base and growing interest in system purchases. Despite recent stock volatility, the potential for explosive growth has kept investor sentiment high, driving the stock up nearly 93% in the past year.
The Future of Computing
IonQ is a quantum computing hardware and software company developing a state-of-the-art trapped ion quantum computer and pioneering quantum algorithms needed to overcome hurdles too complex for classic computing systems. IonQ’s distinctive approach involves using atomic ions as qubits, utilizing their unique internal states for enhanced quantum information processing.
The company has established itself as a leader in the quantum computing niche, recently opening the first U.S. quantum computing manufacturing facility and realizing the groundbreaking achievement of 35 algorithmic qubits with its IonQ Forte system a full year ahead of schedule.
IonQ also recently appointed two distinguished professionals to its Board of Directors: Robert Cardillo, former Director of the National Geospatial-Intelligence Agency, and Bill Scannell, President of Global Sales and Customer Operations at Dell Technologies. These appointments will help fortify IonQ’s position as a leading player in the burgeoning quantum economy.
Recent Results and Future Outlook
2023 was a big year for the startup company. It achieved its technology-related goals ahead of schedule while meeting and exceeding its financial expectations. IonQ’s Q4 revenue of $6.1 million surpassed the consensus estimate of $5.8 million.
Looking forward, IonQ predicts a more robust performance for 2024. The company anticipates Q1 revenues between $6.5 million and $7.5 million, against the consensus of $6.6 million. For FY24, IonQ predicts revenue between $37 million and $41 million, compared to the consensus prediction of $38.9 million.
The company’s expanding customers, including Airbus, Hyundai Motors, and the United States Air Force Research Laboratory, as well as recent sales in Europe, have sparked a rising interest in system purchases, especially in Europe, fueling optimism for the coming year.
Where IONQ Stock Stands Now
Enthusiasm for the nascent technology has helped drive IONQ stock, which has gained 92.87% over the past year. However, some steam has blown off, and the stock has pulled back 38.38% in the past 90 days. The current share price of $9.20 is trading towards the lower quartile of its 52-week range of $4.61-$21.60. It shows ongoing negative price momentum, trading below the 20-day (10.43) and 50-day (11.02) moving averages.
Despite the falling share price, IonQ stock trades in relatively rich territory using comparative metrics. For example, it has a price-to-sales ratio of 84.59x vs. a Technology sector average of 4.65x and a Computer Hardware industry average of 1.16x.
However, the company’s valuation is based on lofty expectations for potentially explosive growth, which tends to be the hallmark of game-changing new technologies. At this point, a fair valuation for such a highly speculative investment rests in the eye of the beholder.
What is the Forecast for IONQ in 2024?
Analysts covering the stock have mostly been bullish. For example, Benchmark analyst David Williams recently reaffirmed a Buy rating on the stock, setting a price target of $16. He highlighted that the company surpassed its technology goals and financial expectations, and gave upbeat guidance on robust growth in 2024, providing compelling evidence of a promising outlook.
IONQ is currently listed as a Strong Buy based on four analysts’ stock ratings in the past three months. Their average IONQ price target of $16.63 represents an upside potential of 80.76% from current levels.
Closing Thoughts
IonQ continues to make fundamental strides in quantum computing, marking significant technological advancements ahead of schedule and outperforming financial predictions. The company’s unique approach to quantum computing and the strategic appointments to the Board of Directors have further secured its leading position in this evolving segment.
Despite the recent pullback in share price, the valuation reflects the anticipatory growth typical of breakthrough technologies, encouraging bullish investor sentiment. IonQ stands out as a promising entity in disruptive quantum technology. It is, however, a highly speculative investment, and investors would do well to approach it with eyes wide open to the range of possible outcomes.
