Today is shaping up negative for Rigetti Computing, Inc. (NASDAQ:RGTI) shareholders, with the analysts delivering a substantial negative revision to next year's forecasts. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. Shares are up 8.4% to US$1.55 in the past week. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

Following the downgrade, the latest consensus from Rigetti Computing's five analysts is for revenues of US$16m in 2025, which would reflect a major 36% improvement in sales compared to the last 12 months. Losses are expected to increase slightly, to US$0.34 per share. However, before this estimates update, the consensus had been expecting revenues of US$24m and US$0.33 per share in losses. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

The consensus price target was broadly unchanged at US$2.88, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The period to the end of 2025 brings more of the same, according to the analysts, with revenue forecast to display 28% growth on an annualised basis. That is in line with its 25% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 19% per year. So it's pretty clear that Rigetti Computing is forecast to grow substantially faster than its industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses next year, suggesting all may not be well at Rigetti Computing. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Rigetti Computing after today.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Rigetti Computing, including dilutive stock issuance over the past year. For more information, you can click here to discover this and the 3 other risks we've identified.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks with high insider ownership.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.