Rocket Lab (RKLB) Stock Drops 46% Yet Analysts Remain Bullish on Space Firm

Key Takeaways

Table of Contents

Brian Gesuale of Raymond James launched coverage on RKLB with a Buy recommendation and $80 price objective, marking approximately 30% potential upside from current trading levels.
Shares of Rocket Lab have plummeted 46% during the past three-month period, primarily attributed to market weakness following SpaceX’s June public offering.
The space firm reported a contract backlog of $2.36 billion at quarter-end, representing a 137% increase compared to the prior year.
According to Gesuale’s projections, Rocket Lab should achieve positive free cash flow by 2028, two years before SpaceX’s anticipated 2030 breakeven point.
Among Wall Street analysts tracking RKLB, 83% maintain Buy recommendations, with a consensus price objective near $112.

Rocket Lab (RKLB) secured a new Buy recommendation from Raymond James this past Friday, as analyst Brian Gesuale established an $80 price objective. Shares climbed 1.6% to reach $62.95 during Friday’s session.

Rocket Lab USA, Inc., RKLB

Gesuale’s $80 price objective suggests approximately 30% potential appreciation from current price levels, though it falls considerably short of the broader analyst community’s consensus target hovering around $112.

The past quarter has proven challenging for RKLB shares. The stock declined 46% during the three-month stretch leading into Friday’s trading, after reaching heights above $150 in late May. By late July, shares had dropped below $59, occurring weeks after SpaceX completed its public market debut.

Notably, this decline wasn’t triggered by disappointing operational performance. The company delivered second-quarter revenue that exceeded analyst expectations in August and provided encouraging third-quarter guidance.

The primary driver behind the selloff was investor sentiment surrounding the SpaceX IPO. Space sector equities rallied heading into the June listing, then experienced sharp reversals after pricing. Even SpaceX shares fell beneath their $135 initial offering price shortly following the debut.

Rocket Lab reported quarterly revenue of $234.1 million, marking a 62% year-over-year increase. The company maintains a cash position exceeding $2 billion.

Massive Backlog Supports Optimistic Outlook

Gesuale highlighted Rocket Lab’s $2.36 billion contract backlog as a fundamental driver of his bullish thesis. This figure represents a 137% jump versus the comparable period in the previous year.

The expanding backlog demonstrates strong market demand for its Electron launch vehicle along with the forthcoming Neutron medium-lift rocket, engineered to compete in higher-capacity mission segments.

Gesuale characterized Rocket Lab as a complete mission solutions provider, delivering components, software platforms, and satellite systems to civil, commercial, and national security clients.

This diversified business model, he contends, generates stable recurring revenue streams that dedicated launch service providers cannot match.

Iridium Acquisition Reshapes Competitive Landscape

During June, Rocket Lab revealed its intention to acquire Iridium, providing the company with an operational satellite communications network. This transaction positions the firm closer to SpaceX’s competitive standing, which manages the Starlink constellation.

Gesuale noted that following completion of the Iridium transaction, Rocket Lab will become the sole vertically integrated space enterprise demonstrating positive free cash flow while pursuing a partnership-focused growth strategy.

His financial model projects standalone Rocket Lab revenue reaching approximately $1.8 billion by 2028, expanding to roughly $2.9 billion on a combined basis incorporating Iridium operations.

These projections compare to anticipated 2026 revenue of approximately $960 million, following estimated 2025 sales around $600 million.

The company is expected to generate positive free cash flow beginning in 2028, consistent with Wall Street consensus forecasts. By comparison, SpaceX isn’t projected to achieve this financial milestone until 2030.

Currently, 83% of analysts following RKLB maintain Buy ratings, significantly exceeding the typical 55% to 60% Buy-rating percentage observed across S&P 500 constituents. The mean analyst price target stands at approximately $112.

Raymond James aligns with the prevailing bullish sentiment, despite its $80 target reflecting a more measured stance than the Street average.

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