Rocket Lab USA (RKLB), a member of the Russell 2000 Index, has emerged as a key player in the small satellite launch market, attracting attention for its growth potential. Analysts are optimistic about RKLB’s stock, with projections suggesting a 45% upside potential. The growth is expected to be driven by the increasing demand for satellite launches and the company’s expanding commercial, government, and defense customer base.
In context, the Russell 2000 Index (IWM) tracks 2,000 U.S. small-cap stocks, serving as a key benchmark for these companies.
What does Rocket Lab do?
Rocket Lab specializes in the development and launch of small satellite launch vehicles. The company’s main include the Electron rocket, designed for small satellite launches, and the Neutron rocket, a reusable, medium-lift vehicle currently in development. The company caters to the growing demand from smaller commercial firms, research institutions, and government agencies that require cost-effective solutions for launching smaller payloads.
Earlier this week, the company was in news after it acquired a majority stake in Mynaric AG (MYNAY), a German supplier of optical communications terminals. The acquisition is a part of the company’s broader ambition to control the entire space ecosystem, from satellite manufacturing to overseeing advanced space-based communications.
All Eyes on Rocket Lab’s Neutron Launch
Rocket Lab marked several significant milestones in its launch and space systems business in 2024. Its Electron rocket set a new record with 16 launches, a 60% increase from the previous year. The company also secured more than $450 million in new contracts and made substantial progress on its Neutron rocket. Looking ahead, all eyes are on the debut launch of the Neutron rocket, now scheduled for the second half of 2025. Rocket Lab had initially planned for a mid-2025 launch.
Interestingly, Neutron is designed to compete with other heavy-lift rockets, like Elon Musk-owned SpaceX’s Falcon 9, and is expected to play a key role in launching satellites, cargo, and even human missions.
However, the delay in the Neutron launch and higher capital expenditures continue to be a concern for investors. The company earlier stated that Q1 2025 is expected to see negative free cash flow with a projected cash burn of $40 million to $80 million. However, the company expects the cash burn to ease in the following quarters.
Top Analyst Stay Bullish on RKLB Stock
Recently, five-star-rated analyst Ronald Epstein from Bank of America Securities reiterated his Buy rating in RKLB stock, predicting an upside of 62%.
Epstein highlighted that the company is making notable strides with its Neutron medium-lift rocket, especially in advancing the Archimedes engine and composite structures, both key components for its anticipated 2025 launch. He added that by focusing on vertical integration and in-house engineering, Rocket Lab aims to reduce risks and improve operational efficiency.
Similarly, top-rated analyst Erik Rasmussen at Stifel Nicolaus views the recent dip in Rocket Lab’s stock as a buying opportunity, predicting growth to pick up in the second half of the year. He also emphasized that Neutron will play a crucial role in the company’s future market expansion. Year-to-date, RKLB stock has declined by 27.25%.
Is Rocket Lab Stock a Buy?
According to TipRanks, RKLB stock has received a Moderate Buy consensus rating, with eight Buys and five Holds assigned in the last three months. The average price target for Rocket Lab is $26.86, suggesting a potential upside of 45% from the current level.
Questions or Comments about the article? Write to editor@tipranks.com