Technology is leading but underrated! Quantinuum (QNT.US) was upgraded by Damo to “gain weight” and listed as the preferred target in the field of quantum computing

The Zhitong Finance App learned that Morgan Stanley raised its stock rating of quantum computing company Quantinuum (QNT.US) from “equal to the general market” to “increased holdings”, lowered the target price from $78 to $62, and listed it as the “preferred target” in this field. As of press release, Quantinuum's US stocks rose nearly 5% before the market on Thursday.

Analysts at Morgan Stanley wrote in a report to clients: “By 2040, quantum computing is expected to open up a market of more than 100 billion US dollars, but different hardware technology routes make it difficult for companies to compare. Currently, the revenue scale of each company is still too small, and it is not enough to distinguish between each other's strengths and weaknesses based on this.”

The analyst said, “We have established a self-developed evaluation framework to examine the results each company has achieved in four main areas — technological progress, execution capacity, manufacturability, and a wider range of progress indicators. Currently, we give the highest weight to technology, because in this area, the evidence available is the most complete, and the differences between companies are the most obvious.”

The analyst added, “Quantinium has been outstanding in terms of technology and execution capabilities. Among the pure targets focusing on the quantum computing business, the company is the most advanced and has the best execution record, yet the valuation multiplier given to it by the market is the lowest among the entire industry group — the lowest valuation multiplier calculated based on the 2030 revenue forecast.”

The analyst further pointed out that in terms of error correction frameworks in the field of quantum computing, Quantinum has made “the most advanced” progress, and its execution record is also the most outstanding. However, the analyst notes, “The implied visibility factor in Quantinuum's current stock price is only about 43%, which is the lowest in the entire industry group, and we assume this coefficient is 75%. IonQ has a slight advantage in manufacturability, so its visibility coefficient is close to Quantinium. However, for Quantinuum, the gap between our judgment and market pricing is much larger.” Analysts also said that the upcoming quantum computer Sol will be Quantinum's next catalyst, and the product is scheduled to be released next year.

Furthermore, analysts maintained the “same as the market” rating for IonQ (IONQ.US) and covered Infleqtion (INFQ.US) and Xanadu (XNDU.US) for the first time, giving them “equal to the market” rating.