TLDR
- Morgan Stanley upgraded Rocket Lab to Buy with a $105 price target, up from $67, driving shares 6.1% higher Friday
- The company secured an $816 million defense contract and posted record $155 million quarterly revenue with $1.1 billion backlog
- Neutron rocket launch scheduled for Q1 2026 marks entry into medium-lift market against SpaceX competition
- Stock surged 291% in 2025 but trades at 85-times forward sales while posting $59 million quarterly operating losses
- Wall Street rates the stock Moderate Buy with seven Buy and three Hold ratings
Rocket Lab shares climbed 6.1% Friday after Morgan Stanley analyst Kristine Liwag upgraded the space company to Overweight from Hold. The new $105 price target represents a 57% jump from the previous $67 target.
The upgrade comes as Rocket Lab transitions from pure launch provider to multi-faceted space company. Liwag cited consistent execution and credible medium-lift market entry as key drivers behind the bullish call.
The space sector rallied on the news. AST SpaceMobile jumped 14.3% while Intuitive Machines gained 10.7% following Morgan Stanley’s favorable commentary.
Rocket Lab posted record third-quarter revenue of $155 million, up from $104.8 million year-over-year. The company completed 21 successful Electron launches in 2025 and deployed 245 satellites to date.
Backlog now sits at $1.1 billion across launch services and space systems. Gross profit hit $57.3 million with 37% margins in the recent quarter.
Defense Contracts Drive Growth
The company landed an $816 million Space Development Agency contract for 18 missile-warning and tracking satellites. Total potential value reaches $1 billion with additional options included.
This win proves Rocket Lab can compete against established defense primes. Morgan Stanley expects the contract to boost positioning for future Golden Dome opportunities tied to Trump’s missile defense initiative.
The U.S. Space Force added Neutron to its launch vehicle roster with a $5 million initial order. NASA expanded Rocket Lab’s role under its VADR contract for future constellation missions.
Rocket Lab will support Kratos’ MACH-TB 2.0 hypersonic test launches for the Department of Defense. That $1.45 billion program kicks off in Q1 2026.
Neutron Launch Approaches
Neutron marks Rocket Lab’s push into the medium-lift market dominated by SpaceX’s Falcon 9. The reusable rocket targets constellation deployment and cargo resupply missions.
First launch window opens in Q1 2026 pending final approvals. Success here unlocks bigger contracts and repeat launch demand from commercial and government customers.
The stock surged 291% in 2025 but now trades at premium valuations. At 85-times forward sales and a $51 billion market cap, there’s little room for execution missteps.
Profitability Remains Elusive
Operating losses stayed flat around $59 million for three straight quarters. R&D spending of $70.7 million and administrative costs of $45.6 million pushed total operating expenses to $116.3 million in Q3.
Wall Street maintains a Moderate Buy consensus with seven Buy ratings and three Hold ratings. The average price target of $76.63 trails current levels after last year’s rally.
The global space economy could hit $1.8 trillion by 2035 according to the World Economic Forum. Satellite demand for broadband, Earth observation, and orbital data workloads drives growth projections.
CEO Peter Beck highlighted alignment with defense programs like Golden Dome and Space Development Agency constellations during recent earnings commentary. The company has deployed hardware for over 1,700 missions through its space systems division.
AST SpaceMobile secured prime contractor status on the Missile Defense Agency’s SHIELD program, sending shares up 70% over the past month. Defense-space stocks continue benefiting from government spending priorities.
