HomeInvestingRocket Lab could surge 55% as leader in launch market, Cowen says

Rocket Lab could surge 55% as leader in launch market, Cowen says

An Electron rocket launches the “There And Back Again” mission from the company’s facility in New Zealand on May 2, 2022.

Rocket Lab

Rocket Lab stock is ready for takeoff, according to Cowen.

The firm on Wednesday upgraded shares of the company to outperform from market perform and raised its price target to $8.00 from $6.50. The new target price is a 55% upside to where shares currently trade.

“We’re upgrading RKLB to Outperform for key execution milestones, an improved competitive position, and benefits from Russian sanctions,” analyst Cai von Rumohr wrote in a Wednesday note. These milestones support an estimated 35% to 40% revenue growth with profitability and positive free cash flow in 2024, they added.

Launch leader

Sanction beneficiary

The company will also benefit from Russian sanctions, as the bans impact competitors Soyuz and NOC’s Antares.

“The sanctions have relatively little impact on RKLB’s Electron, which is smaller than the impacted vehicles, but they will bolster demand for Neutron, which has roughly the same payload capacity as Soyuz and Antares,” von Rumohr wrote.

Overall, Rocket Lab’s long-term success is supported by its strong performance versus its peers, solid client relationships and repeat business, according to Cowen.

“While launch failure(s) or customer/weather delays are a generic risk, we think it’s plausible that Electron ramps to 23-26 launches by 2025 and Neutron reaches 2-3 launches by 2025,” said von Rumohr.

The firm also sees the company reporting solid third-quarter results in September.

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