Having surged more than 70% this year, Rocket Lab (RKLB) has emerged as one of the hottest names in the space sector.
The company, founded in 2006 in New Zealand, is now headquartered in California, specializing in satellite launches and space systems. It has become a key player in the commercial space race to compete with Elon Musk’s SpaceX.
Rocket Lab’s stock soared 360.58% in 2024, fueled by record launch cadence, growing defense contracts, and investor enthusiasm for Neutron, the company’s larger, next-gen reusable rocket.
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On Aug. 7, Rocket Lab posted second-quarter revenue of $144.5 million, topping analyst estimates of $135.41 million. This was driven by “strong operational performance and program execution,” according to the company’s founder and CEO Peter Beck.
Yet the company is not currently profitable. It reported a loss of 13 cents per share, wider than the 8-cent loss expected.
For the third quarter, Rocket Lab expects revenue of $145 million to $155 million, close to the $150.45 million consensus. Adjusted gross margins are projected between 39% and 41%.
Beck said the third quarter could be “another potential record quarter.” He also said the company is “on track for a record year of launches and spacecraft delivery.”
Some analysts kept a bullish outlook following the earnings beat, even if the stock is trading at a very high price-to-sales ratio (P/S) of 43, which is typically unsustainable.
Image source: Rocket Lab USA
Wall Street raises Rocket Lab stock price target after earnings
Several analysts have raised their stock price target for Rocket Lab.
Needham raised its price target on Rocket Lab to $55 from $45 and reiterated a buy rating, according to thefly’s reporting.
The firm pointed to the company’s strong second-quarter results, with revenue, EBITDA, and guidance all coming in above consensus. Management also sounded more confident about sustaining revenue growth and expanding gross margins, Needham said.
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KeyBanc analyst Mike Leschock lifted his price target on Rocket Lab to $50 from $40 and maintained an overweight rating, citing stronger margins than his model anticipated and growing confidence in the progress of the Neutron rocket.
KeyBanc noted that while Rocket Lab’s timeline to breakeven free cash flow is pushed out 3-6 months, but said this is due to increased investment in high-growth avenues, and Rocket’s cash position gives KeyBanc confidence in its ability to execute on these initiatives.
The stock closed at $43.43 on Aug. 12, up 70% over the past two months, but not everyone on Wall Street is convinced it can keep climbing.
One veteran analyst sounds the alarm on Rocket Lab
Stephen Guilfoyle, a 30-year Wall Street veteran who now runs Sarge986 LLC, a family trading operation, has warned about Rocket Lab as “profitability” concerns emerge, he wrote on TheStreet Pro.
Guilfoyle, who has successfully traded Rocket Lab stocks with a 382% gain, said he was not entirely satisfied with the company’s financials.
“The balance sheet is strong, cash flows are not. Gross margins are improving. Net profitability appears to be moving further away,” he wrote, adding that the guidance was fine but did not leave him amazed.
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For the first half of 2025, Rocket Lab posted operating cash flow of -$77.467 million and capex of $60.719 million, resulting in free cash flow of -$138.186 million. That’s a sharper cash burn than the -$50.109 million recorded in the same period last year.
“Beck mentioned the term long-term profitability once in the press release. Neither the word ‘profit’ nor ‘profitability’ came up at all during the call. I thought that mildly troubling,” Guilfoyle said.
Guilfoyle canceled the stock’s $51 target on July 17 when shares were going “parabolic.” He now warns the stock has returned to what he calls an “old pitchfork” model and appears to be “fumbling around for support at its 21-day EMA.” He cautioned that if the stock loses that technical support, swing traders could likely start selling the stock.
“I do think the time has come to de-emphasize RKLB,” Guilfoyle said. He plans to cut his stake in Rocket Lab but without fully exiting.
The stock is currently Guilfoyle’s third-largest holding, and he plans to trim it down to around his fifth or sixth-largest position.
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