IonQ Declines 25.8% YTD: How Should Investors Play the IONQ Stock?
IonQ IONQ shares have declined 25.8% year to date (YTD), underperforming the broader Zacks Computer and Technology Sector’s appreciation of 22.1% and the Zacks Computer-Integrated System Industry’s return of 27.1%.
IONQ also lagged its industry peers like International Business Machines IBM, Agilysys AGYS and Hewlett Packard Enterprise HPE.
Shares of IBM, AGYS and HPE have returned 34.3%, 24.2% and 20.8%, respectively.
This underperformance can be attributed to increasing operating expenses and commercial marketing expenses. In the first half of 2024, its sales and marketing expenses doubled to $12.8 million, whereas total operating costs increased 70.3% year over year to $1.2 billion.
IonQ, Inc. Price and Consensus
IonQ, Inc. price-consensus-chart | IonQ, Inc. Quote
IonQ Benefits From Expanding Clientele
IONQ recently announced a $54.5 million contract with the U.S. Air Force Research Lab to develop and deliver hardware and technology to allow scaling, networking and implementation of quantum systems over the next four years.
It will also develop quantum networking compatibility with already present telecommunication systems and infrastructure, interoperability with other quantum systems and usability of systems in different environments.
The new contract is a continuation of IONQ’s relationship with AFRL. In 2022, IONQ received a quantum computing hardware supply contract for $13.4 million and in 2023, it received a contract to provide two barium-based trapped ion computing systems for $25.5 million.
IonQ is an industry leader in quantum computing and has announced $72.8 million in booking year to date, driven by the extension of contracts. This agreement will enable it to meet its booking guidance for the year 2024 of $75-95 million.
Will IonQ’s Recent Expansion Aid Prospects?
The latest IonQ agreement with the U.S. Air Force Research Lab is expected to conclude over four years and will include fast-switching technology to route signals from different quantum systems. It will require IonQ to miniaturize, modularize, avail and ruggedize the existing technology to best suit US AFRL needs.
IONQ has expanded in the public and enterprise sectors to aid businesses in solving bottlenecks in healthcare, chemistry and finance. It expects strategic collaborations to strengthen its ecosystem to increase value for stakeholders.
It aims to expand larger quantum systems by implementing photonic networking and technologies like optical switching to connect various modules together.
IonQ announced a project with NRL to sample quantum states in molecular structures that affect corrosion and with ARLIS to develop a quantum networking node system for blind quantum computing.
IonQ recently announced the extension of its AWS contract to present quantum computers through Amazon Braket.
It also inked an agreement with the University of Maryland to provide quantum computing access for $9 million.
Earnings Estimates Declining for IONQ
IonQ expects its revenues for the full year 2024 to be between $38 million and $42 million and its bookings to be between $75 million and $95 million.
For 2024, the Zacks Consensus Estimate for revenues is pegged at $40.44 million, indicating year-over-year growth of 83.45%.
The consensus mark for loss is pegged at 84 cents per share against a year-ago loss of 78 cents. However, the figure remained unchanged over the past 30 days.
The Zacks Consensus Estimate for third-quarter 2024 loss is currently pegged at 23 cents against a year-ago quarter loss of 22 cents. It has remained unchanged over the past 30 days.
The consensus mark for third-quarter 2024 revenues is pegged at $11.05 million, indicating year-over-year growth of 79.97%.
Zacks Rank & Valuation
IonQ shares are currently overvalued, as suggested by a Value Score of F.
IONQ currently has a Zacks Rank #3 (Hold), which implies that investors may want to wait for a more favorable entry point. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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