Rocket Lab Shares Fall 46% as Raymond James Initiates Coverage With Buy Rating
Key Takeaways
- •Rocket Lab shares rose 1.6% to $62.95 after Raymond James began coverage with a Buy rating and an $80 price target.
- •Rocket Lab reported second-quarter revenue of $234.1 million, up 62% year over year, and held more than $2 billion in cash reserves.
- •The company’s backlog reached $2.36 billion, increasing 137% from a year earlier and covering demand for Electron and the planned Neutron vehicle.
- •Rocket Lab plans to acquire Iridium, which would add a satellite communications network and expand its vertically integrated business model.
- •Gesuale forecasts positive free cash flow in 2028, with projected 2028 revenue of $1.8 billion standalone or $2.9 billion including Iridium after closing.
Rocket Lab USA, Inc. (NASDAQ: RKLB) received a new Buy rating from Raymond James on Friday. Analyst Brian Gesuale initiated coverage with an $80 price target, representing roughly 30% upside from recent levels. Rocket Lab shares rose 1.6% to $62.95 during the session.
The target is below the broader Wall Street consensus of approximately $112. Despite the new rating, RKLB has declined 46% over the three months leading into Friday’s trading. The stock traded above $150 in late May before closing below $59 in late July, several weeks after the SpaceX initial public offering in June.
The decline followed a broader selloff in space-related stocks after the SpaceX IPO was priced. Shares of SpaceX itself fell below its $135 IPO price shortly after trading began. Rocket Lab’s decline was not attributed to weak operating results in the report: the company recorded better-than-expected second-quarter sales in August and issued a solid outlook for the third quarter.
Rocket Lab reported quarterly revenue of $234.1 million, an increase of 62% from the same period a year earlier. The company also ended the latest quarter with more than $2 billion in cash reserves.
Backlog supports analyst’s outlook
Gesuale identified Rocket Lab’s $2.36 billion backlog as a central part of his investment thesis. The backlog increased 137% year over year and reflects demand for the company’s Electron rocket as well as its upcoming Neutron medium-lift vehicle, which is being developed to compete at a larger scale.
The analyst described Rocket Lab as a comprehensive, end-to-end mission provider that supplies components, software, and satellite platforms to civil, commercial, and national security customers. In his view, the breadth of those offerings can support recurring revenue that launch companies focused primarily on rocket services may not have.
Planned Iridium acquisition
Rocket Lab announced plans to acquire Iridium in June. The transaction would give the company a satellite communications network and place it in closer comparison with SpaceX, which operates Starlink.
Gesuale wrote that, once the Iridium transaction closes, Rocket Lab will be the only vertically integrated space company with positive free cash flow and a partnership-led strategy. He projects standalone Rocket Lab revenue of approximately $1.8 billion in 2028. On a pro forma basis that includes Iridium, he expects revenue to reach roughly $2.9 billion. Because the transaction is still planned rather than completed, the pro forma estimate is separate from the standalone Rocket Lab forecast until the deal closes.
Those estimates compare with approximately $960 million in expected 2026 sales and about $600 million in 2025 revenue. Gesuale projects that Rocket Lab will generate positive free cash flow in 2028, consistent with Wall Street consensus. SpaceX is not projected to reach that milestone until 2030.
Overall, 83% of analysts covering RKLB rate the stock a Buy, compared with a typical Buy-rating ratio of 55% to 60% for S&P 500 stocks. The average analyst price target is approximately $112. Raymond James’ $80 target is therefore more conservative than the broader consensus, while still reflecting the firm’s Buy rating.
Source: CoinCentral
