The growing space exploration industry, fueled by private sector interest and revitalized international competition, presents an intriguing investment opportunity. Rocket Lab (RKLB), a company making substantial strides in satellite launches and space systems, is among the companies playing a significant role in tackling the final frontier.
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Rocket Lab has demonstrated impressive revenue growth and its stock climbed 123% through the last year. Also, its robust pipeline of launch contracts and anticipated profitability of its Neutron rocket paint a promising picture. The combination of impressive revenue growth, a diversified product offering, and the potential for future profitability makes RKLB stock an attractive option for investors eyeing the long-term possibilities of space exploration.
Rocket Lab Finds Its Telemetry
Rocket Lab is a space company offering comprehensive launch services, spacecraft components, satellites, and management solutions for on-orbit operations. Its services aim to simplify and provide cost-effective access to space.
Its light rocket, the Electron, is among the premier small launch vehicles worldwide, accounting for 64% of all non-SpaceX orbital U.S. launches in 2024. The company has completed its 50th Electron mission, reaching this milestone faster than any commercially developed rocket. It has also signed 17 new launch contracts this year, including multi-launch deals with commercial constellation operators and two complicated missions for the Department of Defense.
Rocket Lab recently secured its largest launch contract and demonstrated its versatility by winning a spacecraft design and launch contract for the U.S. Space Force’s Victus Haze program. The company has also successfully produced two spacecraft for NASA’s ESCAPADE mission to Mars, which is scheduled for this year. RKLB’s ongoing growth also includes signing preliminary terms for $49.4m in state and federal funding for expanding solar cell production in Albuquerque, New Mexico, and continuing to develop and produce spacecraft for various commercial and government agencies.
Analysis of Rocket Labs Recent Financials & Outlook
The company recently outperformed projections for the second quarter of 2024, reporting revenue of $106.25 million, which exceeded analysts’ target of $105.46 million and marked the highest quarterly revenue in the company’s history.
The 71% year-over-year revenue increase reflected the growing demand for its space systems products and launch services, with over $720 million in contracts. This helped drive earnings per share (EPS) of -$0.08, beating analysts’ estimates of -$0.10.
Following second-quarter positive results, RKLB’s management has offered guidance for the third quarter of 2024, anticipating total revenue ranging from $100 million to $105 million, with Space Systems accounting for $79 million to $84 million and Launch Services contributing about $21 million. Projected non-GAAP Gross Margins are between 30% and 32%. Operating expenses are expected to fall between $69 million and $71 million on a non-GAAP basis. The company forecasts an adjusted EBITDA loss of $31 million to $33 million, with net interest expenses of $1 million.
What Is the Price Target for RKLB Stock?
The stock has been on a volatile (beta of 2.47) climb upward, ultimately gaining over 123% in the past year. It trades at the high end of its 52-week price range of $3.47 – $8.79 and shows ongoing positive price momentum trading above its 20-day (6.70) and 50-day (6.07) moving averages. With a P/S ratio of 13x compared to the Aerospace & Defense industry average of 2.11x, the stock trades at a healthy premium (so, in this case, no bucks, no Buck Rodgers).
Analysts following the company have been cautiously optimistic about the stock. For example, Bank of America analyst Ronald Epstein, a five-star analyst according to Tipranks’ ratings, recently reiterated a Buy rating on the shares while maintaining a price target of $10.00. He noted that continued traction with commercial and government clients drives upward sales momentum. At the same time, its vertical integration strategy allows for rapid design and construction of spacecraft, accelerating the delivery of spacecraft for client missions.
Rocket Lab is rated a Moderate Buy based on ten analysts’ recent recommendations and price targets. The average price target for RKLB stock is $7.91, representing a potential -19.12% change from the current levels.
Final View of RKLB
Rocket Lab’s exponential growth in satellite launches, coupled with a robust pipeline of contracts and exciting profitability projections, has solidified its position as a serious contender in the industry. With sustained positive price momentum and robust projected revenues, RKLB offers investors a compelling ride in the rapidly evolving space exploration industry.