Space-related stock Rocket Lab (NASDAQ:RKLB) has witnessed a notable pullback this year. Though RKLB has lost substantial value, analysts favor this penny stock (learn more about penny stocks here) and are optimistic about their prospects.
The company specializes in rocket launch services. Before we dig deeper, note that RKLB stock is down about 21% year-to-date.
Analysts’ Views
Goldman Sachs analyst Noah Poponak believes that Rocket Lab has emerged as a leading dedicated launch provider and has grown its product business. Poponak expects the company’s growth to accelerate as it scales its launch business and continues to expand its Product segment.
Poponak initiated coverage on RKLB stock with a Hold recommendation on June 11, citing uncertainty around profitability.
According to the TipRanks Stock Analysis tool, “Bulls Say, Bears Say,” analysts bullish on RKLB stock believe that the strength in the company’s products business creates a recurring revenue and high margin segment.
Also, RKLB’s management remains upbeat and expects a record number of launches in 2024, bolstering its revenues and overall financials. Further, the company’s bookings in the Space Systems business remain strong.
Concerns Remain
The stock is under pressure due to concerns around the number of launches in 2024 as customer readiness, payload delays, and other factors continue to pose challenges. Additionally, it’s important to note that RKLB is yet to achieve profitability, and any delays in launch services could negatively affect its revenue and earnings. Adding to the challenges, the company’s backlog witnessed a sequential decline in the first quarter of 2024.
Is RKLB Stock a Good Buy?
Rocket Lab stock has a Strong Buy consensus rating based on six Buys and two Hold recommendations. The analysts’ average RKLB stock price target of $6.78 suggests 54.44% upside potential from current levels.
Hedge Funds Accumulate RKLB Stock
It’s worth noting that a step up in launch cadence, strong cash collections, and strength in the Space Systems business will likely support RKLB’s financials. Given these developments, the Hedge Fund Confidence Signal is Positive for RKLB stock based on the activity of two hedge funds. Hedge funds increased their RKLB holdings by 1.5M shares in the last quarter.
Bottom Line
While RKLB stock has lost significant value, the expected increase in space launches and ongoing momentum in the Space Systems segment keep Wall Street analysts bullish. RKLB stock also has a positive signal from hedge funds.
Investors can leverage TipRanks’ penny stock screener to find more top-rated penny stocks.
