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On Thursday, the stock price target for Rocket Lab USA (NASDAQ: RKLB) was raised significantly by Cantor Fitzgerald from $7.00 to $24.00. The firm maintained an Overweight rating on the aerospace company's stock. This adjustment follows Rocket Lab's recent announcement of a multi-launch agreement with a commercial satellite constellation operator for its upcoming Neutron rocket.
Rocket Lab revealed on November 12 that it had secured the agreement for Neutron, a medium-lift rocket currently in development. Neutron is designed to be reusable-ready and capable of carrying payloads up to 13,000 kilograms for orbital missions. It is being developed to cater to commercial and U.S. government constellation launches and is also expected to be suitable for human spaceflight in the future.
During the third-quarter earnings call of 2024, Rocket Lab's management confirmed their aim for Neutron's inaugural launch to occur no earlier than mid-2025. The company has outlined a schedule for the multi-launches associated with the new agreement, targeting the first launch in mid-2026 and the second in 2027.
Management's goals include a minimum of up to 20 launches per engine and a total of nine launches by the end of 2027: one in 2025, which is not anticipated to generate revenue, three in 2026, and five in 2027.
Rocket Lab's recent developments and future targets reflect the company's progression in the aerospace sector, with the Neutron rocket being a significant part of its growth strategy. The raised price target by Cantor Fitzgerald signals confidence in Rocket Lab's potential for commercial success with its Neutron launch vehicle.
In other recent news, Rocket Lab USA reported a substantial 55% year-on-year revenue growth in Q3 2024, totaling $105 million, according to its latest earnings call. The company also anticipates Q4 revenue to be between $125 million and $135 million, with GAAP gross margins projected at 26% to 28%. However, an adjusted EBITDA loss for Q4 is expected to range from $27 million to $29 million.
TD Cowen raised its price target for Rocket Lab to $25.00, up from the previous $8.00, while maintaining a Buy rating on the stock. This upgrade was based on the progress of Rocket Lab's Neutron rocket, which is on track for its mid-2025 first launch target and is bidding for National Security launches. The company has secured orders for its third and fifth Neutron launches in 2026-27, indicating robust demand and pricing strength.
In addition, the company's gross margins have improved for three consecutive quarters. Rocket Lab has over 40 launches in its backlog and is projected to set its 2025 launch target between 22 and 25. Other recent developments include twelve successful Electron missions and strategic agreements with U.S. defense and space agencies, including the U.S. Space Force and NASA.
InvestingPro Insights
Rocket Lab USA's recent developments and the raised price target by Cantor Fitzgerald are reflected in the company's market performance. According to InvestingPro data, Rocket Lab has shown impressive price returns, with a 335.88% increase over the past year and a substantial 263.51% gain in the last three months. These figures align with the positive outlook expressed in the article.
InvestingPro Tips highlight that analysts anticipate sales growth for Rocket Lab in the current year, which is consistent with the company's plans for Neutron rocket launches starting in 2025. Additionally, the tip indicating that Rocket Lab holds more cash than debt on its balance sheet suggests financial stability as the company moves forward with its ambitious projects.
However, investors should note that Rocket Lab is currently trading at a high revenue valuation multiple, according to another InvestingPro Tip. This could be reflective of the market's optimism about the company's future prospects, including the multi-launch agreement mentioned in the article.
For those interested in a deeper analysis, InvestingPro offers 14 additional tips for Rocket Lab USA, providing a more comprehensive view of the company's financial health and market position.
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