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On Friday, KeyBanc Capital Markets adjusted the price target for Rocket Lab USA (NASDAQ:RKLB), reducing it to $28 from the previous $32, while maintaining an Overweight rating on the company’s stock. The revision follows Rocket Lab’s recent earnings report and subsequent analysis by KeyBanc. The stock, which has seen a remarkable 216% surge over the past six months according to InvestingPro data, recently experienced a 15.8% decline in the past week, reflecting increased market volatility.
Michael Leshock of KeyBanc stated, "Fundamental Thesis Intact; Post Rocket Lab USA’s earnings/our analysis, we maintain our Overweight rating and lower our price target to $28 (from $32) to reflect the lower 1Q25E sales baseline (via timing/mix), as our LT thesis remains intact." He emphasized that the long-term prospects for the company are still favorable despite the adjustment in the sales forecast. InvestingPro data shows impressive revenue growth of 78.3% in the last twelve months, though the company maintains a moderate debt level with a current ratio of 2.04, indicating strong liquidity.
The reassessment of the price target is attributed to a recalibration of the expected sales for the first quarter of 2025, factoring in timing and product mix considerations. Despite this, Leshock’s confidence in Rocket Lab’s strategic direction is unwavering.
Leshock also noted a change in the schedule for Rocket Lab’s Neutron rocket, stating, "Neutron’s first launch timing is now 2H25 (from ’no earlier than mid-2025’), which we believe expresses management’s confidence in where RKLB is in the production and testing processes, and its ability to meet qualifications/milestones in a timely manner." This update indicates a slight shift in the anticipated timeline but suggests a positive outlook on the company’s progress.
The analyst further expressed a belief that Rocket Lab is poised to emulate the rapid growth trajectory of SpaceX and establish itself as a leading force within the industry. "We believe RKLB is on track to follow a similarly aggressive growth trajectory as SpaceX, and RKLB is positioned to be an industry leader in both launch services and satellite manufacturing/design," Leshock concluded. This sentiment underscores KeyBanc’s ongoing endorsement of Rocket Lab’s potential in the aerospace sector. With analyst targets ranging from $13.50 to $35.00, and 12 additional valuable insights available on InvestingPro, investors can access comprehensive analysis including the company’s detailed Fair Value assessment and financial health metrics in the Pro Research Report.
In other recent news, Rocket Lab USA reported significant revenue growth in its fourth-quarter 2024 earnings, with a 121% year-over-year increase, reaching $132.4 million. Despite this revenue beat, the company’s earnings per share fell short of expectations, coming in at -$0.10 compared to the forecasted -$0.09. The company also announced a total backlog of $1.07 billion, indicating strong future demand, and signed new contracts worth over $450 million in 2024. Cantor Fitzgerald analyst Andres Sheppard reaffirmed an Overweight rating with a $24 price target on Rocket Lab shares, emphasizing the company’s progress on the Neutron rocket project. The Neutron rocket, a medium-lift launch vehicle, is set for its first launch in the second half of 2025. Rocket Lab has also signed a multi-launch agreement with a commercial satellite constellation operator, aiming for a minimum of 20 launches per engine in the reusable aspect of the Neutron project. Additionally, the company plans to conduct over 20 launches in 2025, reflecting its strong operational performance and future growth prospects.
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