QBTS earns price target raise at Roth

Things are looking up for D-Wave Quantum (D-Wave Quantum Stock Quote, Chart, News, Analysts, Financials NYSE:QBTS), says Roth MKM analyst Suji Desilva.

In a research update to clients November 14, Desilva maintained his “Buy” rating and raised his price target on QBTS from $2.00 to $3.00.

The analyst says following the company’s third quarter, which continues to show losses and modest revenue, there is “driving traction across multiple verticals”.

“We are encouraged that the commercial (60% of revenue) segment continues to represent a strong part of the mix,” the analyst wrote. “QBTS’ commercial customer base represents 76 of the company’s 132 customers. However, QBTS indicated it is seeing increasing traction from the government and research segments, with both sectors seeing ~+50% y/y revenue growth for the company. We expect QBTS to gain increasing traction across target focus verticals such as manufacturing/logistics, retail/distribution, financial services, and defense/ aerospace, with efforts to uplevel the company’s salesforce capability. While professional services remain lumpy, we are encouraged by the strong services bookings growth in the quarter. We believe professional service visibility represents a lead indicator for future QCaaS revenue, which is growing steadily each quarter.”

The analyst thinks QBTS will post an EPS loss of $0.37 on revenue of $8.9-million in fiscal 2024. In fiscal 2025, he expects an EPS loss of $0.39 on a topline of $18.5-million.

“Our QBTS price target of $3 represents a CY25E EV/sales multiple of ~22x and represents a premium versus established computer infrastructure technology peers’ CY25 average of 5.0x, reflecting a relatively higher QBTS growth opportunity, in our view,” Desilva added.