Canopy Growth stock tumbles after announcing $200 million share sale plan
On Friday, JMP analysts maintained a Market Perform rating on Rocket Lab USA (NASDAQ:RKLB) following the company’s announcement on March 11, 2023, of its intent to acquire a majority stake in Mynaric (ETR:M0YNn), a supplier of optical communications terminals, for $75 million. The payment for this acquisition may be made in cash or shares. Rocket Lab’s stock has seen a decline of approximately 28% since the beginning of the year, a sharper drop compared to the S&P Aerospace & Defense ETF (ticker: XAR), which has decreased by about 4.1%, and the Russell 3000 index, which is down roughly 5.2%.
In conjunction with the acquisition news, Rocket Lab disclosed through a Form S-3 filing its plans for an at-the-market (ATM) equity offering. The company aims to sell up to $500 million worth of shares. Proceeds from this equity offering may be used to fund the Mynaric acquisition as well as other potential future acquisitions, as indicated in the company’s press release. The company’s financial position shows promise, with InvestingPro data revealing impressive revenue growth of 78% in the last twelve months, though analysts expect the company to remain unprofitable this year. Get access to 12+ additional InvestingPro Tips and comprehensive financial analysis for smarter investment decisions.
The deal with Mynaric also includes a potential earn-out consideration that could amount to an additional $75 million, contingent on Mynaric achieving certain future revenue targets. This earn-out component provides an incentive structure tied to the performance of Mynaric post-acquisition.
Rocket Lab’s strategic move to acquire Mynaric aligns with its growth objectives and could potentially enhance its capabilities in the aerospace and defense sector. The financial mechanisms put in place, including the ATM equity offering, are designed to support this expansion while offering flexibility in funding.
The current Market Perform rating by JMP analysts suggests a neutral stance on Rocket Lab’s stock, reflecting the company’s recent performance and market activities in relation to the broader industry trends and the specifics of the Mynaric acquisition. The company maintains a healthy liquidity position with a current ratio of 2.04, indicating strong ability to meet short-term obligations. For detailed insights into Rocket Lab’s financial health, valuation metrics, and growth prospects, explore the comprehensive Pro Research Report available on InvestingPro, covering over 1,400 US stocks.
In other recent news, Rocket Lab USA, Inc. has made notable strides in the space industry. The company introduced two advanced software suites, InterMission and MAX Constellation, aimed at enhancing the autonomy and security of space missions. These developments were announced at the SATELLITE conference, highlighting Rocket Lab’s commitment to improving space operations. In a strategic move, Rocket Lab also announced its intention to acquire a controlling stake in Mynaric, a company specializing in laser communication equipment for satellites. This acquisition is expected to strengthen Rocket Lab’s position in the space applications market, with the transaction valued at approximately $75 million.
Additionally, Rocket Lab launched a $500 million at-the-market equity offering program to support growth and potential acquisitions, including the Mynaric deal. This program, involving firms like BofA Securities and Stifel, Nicolaus & Company, provides Rocket Lab with the flexibility to pursue mergers and acquisitions. Analysts from KeyBanc and Stifel have maintained positive ratings on Rocket Lab, with price targets of $28 and $27, respectively. These ratings reflect confidence in Rocket Lab’s strategic initiatives and its ongoing Neutron rocket development program, set for its inaugural launch in the second half of 2025.
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