Rigetti Computing (RGTI), a quantum computing startup that has surged nearly 160% year-to-date, received a rating downgrade from B. Riley analyst Craig Ellis ahead of its third-quarter earnings report, due on November 10. The five-star analyst lowered his rating to Hold from Buy, while raising the price target to $42 from $35, citing valuation concerns and near-term sales risks. RGTI stock dropped about 11% during Monday’s trading session.
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Why the Downgrade?
Ellis is optimistic about Rigetti’s positive momentum, including $11.5 million in new deals announced in September, especially as the company moves from 100-qubit systems toward 1,000-qubit platforms by 2030.
However, he believes the stock’s current valuation already prices in a major portion of its long-term potential. The company’s market cap now sits at $14.3 billion, which he estimates reflects 52% of the total addressable market (TAM) for 2030–2035.
Also, he is taking a more cautious stance due to potential delays in U.S. government funding authorizations, which could impact near-term sales. Moreover, Ellis believes Q3 estimates are achievable, but does not expect Q4 guidance to be in line with expectations.
Overall, Ellis noted that Rigetti’s recent commercial wins help expand its market reach and validate its technology. Thus, the analyst chooses to remain on the sidelines while closely watching its tech progress and business deals.
Expectations From Rigetti’s Q3 Results
Rigetti’s Q3 earnings are expected next week. Wall Street is expecting RGTI to report a loss of $0.05 per share, compared with a loss per share of $0.08 in the same period last year. Meanwhile, analysts project revenues of $2.17 million, down from $2.38 million in the year-ago quarter.
Is RGTI Stock a Good Buy?
Turning to Wall Street, Rigetti stock has a Strong Buy consensus rating based on six Buys assigned in the last three months. At $30.25, the average RGTI stock price target implies a 23.62% downside risk.
