Rocket Lab Has A Proven Business Model and Viable Profitability Path In 1-3 Years: Keybanc Analyst

KeyBanc analyst Michael Leshock initiated coverage on Rocket Lab USA Inc RKLB with an Overweight rating and a price target of $8.

The analyst noted RKLB as one of the handful of companies within the Space industry with a proven business model and viable path to profitability in the next 1-3 years. 

The demand for launch services and satellite manufacturing is increasing rapidly, and RKLB is among the few that can service this demand.

Government budgets for space applications have increased annually over the past decade, offering further support for RKLB’s business (as evidenced by recent long-term contract wins). 

Production and testing setbacks are common in the space industry, though Electron’s track record and progress on Neutron are encouraging.

Leshock noted that RKLB has ample capital to achieve free cash flow breakeven in the second-half of 2025. 

Also Read: Rocket Lab’s Stock Soars on $515 Million Deal: Ushering in a New Era of Aerospace and Defense Innovation for America

Neutron remains on schedule to meet its targeted late 2024 launch date, and it can tap into a much larger TAM vs. its legacy operations.

The analyst noted the valuation as attractive, trading at a meaningful discount to its historical P/S multiple.

Leshock noted an upside well above his price target if the company can execute its mid-to-long-term initiatives.

The analyst projected Q4 revenue and EPS of $66 million (versus consensus of $66.04 million) and $(0.06) (versus consensus loss of $(0.10).

Price Action: RKLB shares are trading lower by 0.38% to $4.92 on the last check Wednesday.

Photo via Wikimedia Commons