Bank of America named two space pure-plays as top picks in the evolving sector, seeing opportunities for investors in Rocket Lab and Terran Orbital . Space stocks have been hit hard this year, as Bank of America’s Ron Epstein noting that “as interest rates rise, we have seen capital dry up, with space stocks consequently selling off significantly relative to the broader market.” “We think there are still attractive opportunities available for those investors seeking to invest in high-growth space end markets,” Epstein wrote in the note to investors on Monday. “We continue to see upside to federal spending for space and defense capabilities, and we believe this robust growth profile will continue to drive the expansion of the space industry.” The firm sees Rocket Lab as having the “best overall portfolio” among space pure-plays, having executed successfully on its expansion-by-acquisition strategy. Bank of America has a $12 price target on Rocket Lab’s stock, which is 132% above the current share price. Rocket Lab stock is down 58% so far this year. Bank of America likes Terran Orbital’s “robust backlog,” with a tight Lockheed Martin partnership after the defense giant added to its existing ownership position with a $100 million investment. The firm has a $9 price target on Terran Orbital stock, representing a 240% increase from current levels – with shares of the company down 73% this year. The firm also called out Northrop Grumman as a top pick, saying that the defense contractor has a “best-in-class space” business. Since 2019, Bank of America says Northrop Grumman’s space unit “has consistently been its fastest growing business and maintained double digit revenue growth nearly every quarter.” Bank of America has a $700 price target on Northrop Grumman’s stock, or 34% above the current share price. – CNBC’s Michael Bloom contributed to this report.