Rigetti Computing, Inc. (NASDAQ:RGTI) missed earnings with its latest quarterly results, disappointing overly-optimistic forecasters. Revenues missed expectations somewhat, coming in at US$3.1m, but statutory earnings fell catastrophically short, with a loss of US$0.14 some 27% larger than what the analysts had predicted. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the latest results, Rigetti Computing's four analysts are now forecasting revenues of US$14.5m in 2024. This would be a meaningful 13% improvement in revenue compared to the last 12 months. Losses are expected to hold steady at around US$0.42. Before this earnings announcement, the analysts had been modelling revenues of US$16.1m and losses of US$0.41 per share in 2024. Overall it looks as though the analysts are negative in this update. Although revenue forecasts held steady, the consensus also made a moderate increase in to its losses per share forecasts.
The consensus price target fell 9.5% to US$3.17, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Rigetti Computing at US$3.50 per share, while the most bearish prices it at US$3.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Rigetti Computing is an easy business to forecast or the the analysts are all using similar assumptions.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Rigetti Computing's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 18% growth on an annualised basis. This is compared to a historical growth rate of 26% over the past three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 17% annually. So it's pretty clear that, while Rigetti Computing's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. Sadly, they also downgraded their revenue forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on Rigetti Computing. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Rigetti Computing analysts - going out to 2026, and you can see them free on our platform here.
Before you take the next step you should know about the 4 warning signs for Rigetti Computing that we have uncovered.
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