IonQ (NYSE:IONQ) shares rocketed ~19% on Monday after the quantum computing pioneer unveiled a major leap in quantum chemistry simulations. Partnering with a top Global 1000 automaker, the company successfully computed atomic-level forces using its advanced quantum-classical auxiliary-field quantum Monte Carlo (QC-AFQMC) algorithm, achieving results more accurate than those derived from classical computing methods. Put simply, IonQ’s system can now calculate nuclear forces at the exact points where molecules change shape or react – data that could play a key role in developing better carbon capture materials and modeling chemical reaction rates.
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That announcement arrived less than a week after IonQ finalized its all-stock purchase of Vector Atomic, a quantum sensing company specializing in positioning, navigation, and timing (PNT) systems for aerospace, defense, and national security. The deal, first announced in mid-September, brings a strong government contract backlog and a team of seasoned quantum engineers into IonQ’s orbit.
B. Riley’s Craig A. Ellis, who is rated by TipRanks among the top 1% of Wall Street’s analysts, called the acquisition a major positive, emphasizing that Vector Atomic adds “75+ world-class scientists and engineers with deep quantum-based positioning, navigation and timing (PNT) system delivery experience for space, submarine, and airborne applications.”
Ellis highlighted that Vector comes with a $200 million-plus government contract backlog, including work tied to the Department of Defense’s X-37B orbital test vehicle, which he said adds “meaningful federal and national security revenue visibility” to IonQ’s existing $100 million in Air Force Research Labs contracts.
The analyst also pointed to 29 pending and issued patents that expand IonQ’s 1,000+ patent portfolio with “fieldvalidated precision atomic clocks, gravimeters, inertial sensors, and synchronization hardware delivering picosecond timing and 1,000x GPS accuracy improvements.” These technologies, Ellis noted, “complement IonQ’s Capella satellite infrastructure,” positioning the company as “the sole integrated compute, networking, and sensing platform among quantum peers.”
The analyst further cited IonQ’s recent dealmaking spree, including Qubitekk, ID Quantique, Lightsynq, Capella, Oxford Ionics, and now Vector Atomic, as “appropriate capital deployment,” supported by a roughly $1.6 billion pro forma cash balance that provides a multi-year R&D runway and flexibility for future acquisitions.
To this end, Ellis assigns IONQ shares a Buy rating and a $100 price target, which implies another 19% gains from current levels. (To watch Ellis’ track record, click here)
Overall, IONQ has solid support amongst Ellis’ colleagues, but its current valuation presents a conundrum. IONQ’s Strong Buy consensus rating is based on 6 Buys and 2 Holds. However, the share gains keep coming in thick and fast, and the $64.57 average price target now suggests shares will decline by 23% over the next 12 months. It will be interesting to see whether the analysts raise their price targets over the coming weeks. (See IONQ stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.