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Investing.com - KeyBanc raised its price target on Rocket Lab USA (NASDAQ:RKLB) to $40.00 from $29.00 on Wednesday, while maintaining an Overweight rating on the space company’s stock. The company’s stock has delivered remarkable returns, surging over 640% in the past year, with analyst targets now ranging from $19.51 to $45.00.
The price target increase reflects Rocket Lab’s strong growth momentum in both its Launch Services and Space Systems segments, along with successful integration of recent acquisitions and progress toward getting its Neutron rocket to the launch pad this year. According to InvestingPro data, the company has demonstrated impressive revenue growth of 65% over the last twelve months, though it currently operates at a moderate debt level.
KeyBanc believes Rocket Lab is well-positioned to secure a portion of the Space Development Agency’s (SDA) tranche 3 contract, expected in October, with its position strengthened by the recent acquisition of Geost that further vertically integrates the business.
The potential SDA award value is expected to be "meaningfully greater" than the $515 million Rocket Lab previously secured in SDA’s tranche 2 contract, according to KeyBanc’s analysis.
Rocket Lab is now producing multiple Archimedes engines per month, incorporating design enhancements based on testing of previous engines, demonstrating the company’s manufacturing capabilities and technical progress. Based on InvestingPro’s Fair Value analysis, the stock is currently trading near its fair value, with 12+ additional ProTips available for subscribers.
In other recent news, Rocket Lab USA has completed the Critical Design Review for the Space Development Agency’s Tranche 2 Transport Layer-Beta program. This advancement allows the program to move forward to full-scale production, with Rocket Lab set to deliver 18 spacecraft for the initiative. Additionally, Rocket Lab successfully launched its 67th Electron rocket, deploying four satellites for HawkEye 360, marking the second of three planned launches under their multi-launch contract. The company is preparing for its next mission, "Symphony In The Stars," which will occur less than 48 hours after the recent launch, highlighting Rocket Lab’s rapid launch capabilities. Goldman Sachs has assumed coverage of Rocket Lab with a Neutral rating, noting the company as a reliable second option for space launches after SpaceX. Despite positive growth in its products business, Goldman Sachs points out that Rocket Lab is not yet profitable and is still in an investment cycle with limited visibility into its path to financial normalization. The company continues to demonstrate strong demand for its Electron rocket, with potential for over 20 launches in 2024. Rocket Lab’s operational flexibility is further showcased by its ability to manage multiple launches in quick succession from its New Zealand facility.
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