IonQ (IONQ +7.64%) stock jumped 8.6% through 3:25 p.m. ET Monday after investment bank Wedbush assumed coverage of the stock with an outperform rating, and assigned the $40 stock a $75 price target -- basically predicting a double in 12 months.
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Why Wedbush loves quantum computing
Valued at $13.6 billion in market capitalization, IonQ is by this measure one of the most richly priced quantum computing stocks -- but Wedbush thinks IonQ is worth the premium. With $187 million in trailing revenue, IonQ's business is about 15x bigger than its nearest rival among the pure-play quantum computing stocks. With $2 billion in the bank, it's also the best-funded. Finally, IonQ is the only one of these pure plays on quantum computing to own its own chip foundry, SkyWater, which IonQ brought in-house last month.
Over time, Wedbush thinks investors will see quantum stocks evolve from research-and-development shops solving engineering and physics problems into "efficient and scalable businesses" that earn profits and generate positive free cash flow. As this happens, IonQ's ability to manufacture its own chips in-house, to iterate rapidly and improve the design of its products, could give it an edge over smaller rivals such as Rigetti and D-Wave Quantum.
NYSE: IONQ
Key Data Points
What's next for IonQ stock
Just don't expect financial success to happen overnight.
Despite boasting substantially more revenue than all its pure-play rivals combined, IonQ still isn't profitable, reporting $510 million in losses last year. Analysts think IonQ might earn a profit this year, but will quickly resume losing money -- and indeed, keep on losing money as far out as any analysts are making forecasts -- 2030 to be precise.
That year, IonQ is forecast to lose $650 million.
Investing in this one is going to require both patience and risk tolerance.
