‘Enough to Hang Onto,' Says Canaccord About D-Wave Quantum Stock

Business Insider

3 days ago

D-Wave Quantum (NYSE:QBTS) stock has been one of the market's biggest winners over the past year, reaping the benefits of the company's positioning in the much-hyped quantum computing space. The proof, as they say, is in the pudding: the stock has surged more than 2,000% over the past 12 months.
Elevate Your Investing Strategy:
Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Still, even the hottest rallies take a pause. When the company released its Q2 results last week, investors appeared to see it as a moment to catch their breath, sending shares slightly lower in the aftermath.
The earnings snapshot was a mixed bag. Revenue came in at $3.1 million, up 42% year-over-year and beating expectations by $0.56 million. However, adjusted EPS showed a loss of $0.08, missing forecasts by $0.03. The miss was largely due to $142 million in non-cash, non-operating charges tied to the re-measurement of warrant liabilities and realized losses from warrant exercises.
Bookings painted a similar 'good news, but…' picture. At $1.3 million, they were up 92% from the same quarter last year, but slipped from $1.6 million in Q1. In fact, first-half 2025 bookings trail last year's pace.
Canaccord's Kingsley Crane isn't alarmed by that slowdown. The analyst points out that the comparison is skewed by the 'landmark' $18.3 million haul in 4Q24.
That's why, heading into the print, Crane was less focused on the headline numbers and more on management's pipeline commentary. Last quarter, D-Wave flagged several system deals in the works, noting their long sales cycles. This time, any evidence of an accelerating pipeline or quicker closures could help keep investor confidence intact.
'To that end,' Crane said, 'we think investors have enough to hang onto in terms of the potential acceleration of near-term system sale deal closures (namely, the MOU with Yonsei University International Campus in Songdo, Yeonsu-gu, Incheon, as well as some other un-named prospects) that they should be satisfied with the company's Q2 results.'
From a broader perspective, system sales are increasingly driving stock performance, and Crane has been assessing what that means going forward. Management still frames one system sale per year as the 'base case,' but CEO Alan Baratz hinted on the call that exceeding that pace is looking more likely. Even if the pace stays at one sale annually, rising average selling prices – boosted by the Advantage2 rollout – could push revenue higher. Meanwhile, QCaaS revenue may be poised for a rebound after likely bottoming in Q2.
'While we're waiting on the 10-Q, we think the Julich Advantage2 upgrade revenue recognition hit the P&L in Q2, and if you hold professional services flat, you get a meaningful decline in QCaaS qoq. With broad momentum in deployments across the business, we see Q2 as a likely trough for QCaaS,' Crane opines.
Bottom line, Crane assigns QBTS shares with a Buy rating and a $20 price target, suggesting an 18% upside from current levels. (To watch Crane's track record, click here)
The rest of Wall Street seems to agree: QBTS carries a Strong Buy consensus, backed by 11 unanimous Buy ratings, with an average target price of $22.18, implying a potential 31% gain in the year ahead. (See QBTS stock forecast)
To find good ideas for quantum stocks trading at attractive valuations, visit TipRanks' Best Stocks to Buy, a tool that unites all of TipRanks' equity insights.