Rocket Lab's stock soars as KeyBanc raises price target

By James Rogers

Rocket Lab shares look set to extend their winning streak to seven days

Rocket Lab USA Inc.'s shares are soaring 12.1% Friday, boosted by KeyBanc Capital Markets' price-target hike for the space-launch company.

In a note released Thursday, KeyBanc Capital Markets said it had hosted a nondeal roadshow with Rocket Lab (RKLB), including the company's chief financial officer, Adam Spice. "We came away with increased visibility/confidence in [Rocket Lab's] ability to scale its business, and we continue to believe it is positioning itself to be an industry leader in both launch services and satellite manufacturing/design," KeyBanc Capital Markets analyst Michael Leshock wrote in the note.

KeyBanc Capital Markets maintained its overweight rating for Rocket Lab and increased its price target to $11 from $8. "We continue to see upside optionality over the long run upon execution," said Leshock.

Related: Rocket Lab's Archimedes engine test 'a significant catalyst' for new Neutron rocket, Cantor says

The stock is on pace for its largest percentage increase since Sept. 25, when it rose 13.57%, Dow Jones Market Data show. Rocket Lab, which is trading around $9.74, is also on pace for its highest close since Feb. 24, 2022, when it closed at $9.89.

Rocket Lab shares are also set to extend their winning streak to seven days, the longest since July 15, 2024, when they rose for nine straight trading days.

Short interest as a percentage of Rocket Lab's public float of shares is 18.8%, according to the latest exchange data.

Related: Amazon launches test satellites in Project Kuiper space-broadband push

On Thursday Rocket Lab said that it has completed its second spacecraft for Varda Space Industries, a life-sciences company that processes materials in orbit and returns them to Earth.

On Sept. 21, Rocket Lab announced the 53rd successful mission of its Electron rocket technology, which launched five satellites into low-Earth orbit for French internet of things company Kinéis.

The SpaceX rival reported a 71% revenue hike in its second-quarter results last month. Rocket Lab also said that it successfully fired its Archimedes engine for the first time. "Following last month's major milestone of a successful hot fire test, Neutron continues to make progress toward its debut launch target of 'no earlier than mid-2025,'" Leshock wrote. "Meaningful infrastructure builds at Neutron's launch pad have been completed in recent months, with more currently underway."

Related: These space stocks deserve attention, analysts say

KeyBanc Capital Markets also sees opportunities for Rocket Lab around Amazon.com Inc.'s (AMZN) Project Kuiper, which aims to build a constellation of more than 3,000 satellites to increase global broadband access. "An FCC directive requires [Amazon] to launch at least 50% of its 3,236 satellites by July 30th, 2026, which would require nearly 50 launches from its current providers," Leshock wrote. "None of [Amazon's] Kuiper satellites have been launched to-date. We view it as logical that Neutron could be chosen to help meet this demand."

Amazon launched the first two Project Kuiper test satellites last year. In June the company said it is targeting its first full-scale Kuiper mission for the fourth quarter of this year, to be launched atop an Atlas V rocket from United Launch Alliance, the joint venture from Boeing Co. (BA) and Lockheed Martin Corp. (LMT).

Rocket Lab shares are up 103.2% in 2024, outpacing the S&P 500's SPX gain of 20.4%.

-James Rogers

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09-27-24 1535ET

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