Piper Sandler called D-Wave Quantum a unrivaled leader in quantum computing that is poised to thrive in what will likely become a multibillion dollar market. Analyst Harsh Kumar initiated the stock at overweight with a price target of $12, which would provide an upside of just under 130% over its last closing price. D-Wave’s big-name partners, which include Deloitte, Volkswagen, Johnson & Johnson and Lockheed Martin , and its focus on a process called annealing will make the stock stand out in the growing industry, Kumar said. “The company is a leader in quantum computing and specializes specifically within annealing quantum computers,” he said in a note to clients. Annealing is a process that optimizes commercial applications. Employee scheduling, autonomous vehicle routing and patient trials are all processes listed by Kumar that could be streamlined by annealing. Kumar said D-Wave Quantum is one of a few revenue-producing companies with a quantum computer, and is able to capitalize in ways that computers used in academic settings are not. However, he did note some countries have quantum computing programs and there are other companies looking to get into annealing. Kumar also pointed to data showing more than 80% of companies have quantum in mind within the next three years, with nearly 40% experimenting with the technology today, to illustrate corporate interest in D-Wave’s business. Read more The perils and promise of quantum computing are nearing. Here are ways to invest He also expressed optimism about where the company was growing, saying it is likely the only company of its size that has in-house programming tools for quantum. It is also developing a computer used for nonoptimization purposes to expand offerings beyond its three current computers. The near-term market is about $2 billion to $5 billion, with one-third being specifically focused on annealing, according to the company. To be sure, Kumar said the stock is one to watch for long-term gains as opposed to short-term, with the company expected to report negative earnings for the next few years. He expects profitability and cash flow by 2025, with the exact timeline being impacted by how long it takes to scale and expand its commercial consumer base. Shares are down 47.7% so far this year. — CNBC’s Michael Bloom contributed to this report.
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