Department of Defense Awards Rocket Lab $190 Million Contract
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 days ago
0mins
Should l Buy RKLB?
Source: NASDAQ.COM
- Record Contract Value: Rocket Lab has secured a $190 million contract from the Department of Defense for the HASTE program, which involves 20 suborbital rocket launches at a cost of $9.5 million each, marking the company's largest launch agreement to date and expected to significantly boost revenue and profit margins.
- Increased Launch Frequency: This contract represents Rocket Lab's 20th launch under the HASTE program, following seven successful missions, demonstrating the company's strong performance in the small rocket launch market and further solidifying its market position.
- Margin Growth: With launch prices increasing from $7.5 million in 2023 to $8.4 million in 2024, the $9.5 million price for HASTE launches will push Rocket Lab's gross margin above 40%, significantly higher than its satellite division's 31%, laying a strong foundation for future profitability.
- Optimistic Industry Outlook: Although Wall Street analysts do not expect Rocket Lab to turn profitable before next year, the significant increase in profit margins alongside the upcoming Neutron rocket launch could shift market expectations, attracting more investor interest.
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Analyst Views on RKLB
Wall Street analysts forecast RKLB stock price to rise
11 Analyst Rating
7 Buy
4 Hold
0 Sell
Moderate Buy
Current: 60.930
Low
63.00
Averages
86.89
High
120.00
Current: 60.930
Low
63.00
Averages
86.89
High
120.00
About RKLB
Rocket Lab Corporation is an end-to-end space company. The Company designs and manufactures small and medium-class rockets, spacecraft and spacecraft components, and related software and services to support the space economy. The Company delivers reliable launch services, satellite manufacture, spacecraft design services, spacecraft components, spacecraft manufacturing, and other spacecraft and on-orbit management solutions that make it easier to access space. Its Launch Services segment provides launch and launch-related services to customers on a dedicated mission or ride-share basis. Its Space Systems segment comprises the design and manufacture of spacecraft components and spacecraft program management services, space data applications, and mission operations. Its space systems solutions are the building blocks for spacecraft, which include composite structures, reaction wheels, star trackers, solar solutions, radios, separation systems, and command and control spacecraft software.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Regulatory Approval: Rocket Lab has received regulatory approval to acquire the satellite company MyNARIC.
- Strategic Move: This acquisition is part of Rocket Lab's strategy to enhance its capabilities in satellite communications and expand its market presence.
See More
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- Transaction Timeline: Rocket Lab expects to close the acquisition of Mynaric AG in April, which will strengthen its position as a full-service space company by enhancing capabilities in launch, spacecraft manufacturing, and satellite components.
- Market Reaction: Following the announcement of regulatory approval, Rocket Lab (RKLB) shares edged up about 0.9% in after-hours trading on Monday, despite a broader market selloff that led to a 5.8% decline in shares by market close.
- Technology Integration: The acquisition of Mynaric will enable Rocket Lab to scale production of laser communication terminals, addressing supply and cost challenges faced by satellite constellations, thereby enhancing its competitiveness in space component manufacturing.
- European Market Expansion: This deal establishes Rocket Lab's first European base in Germany, with Mynaric continuing to operate from its Munich headquarters, further supporting German and broader European space programs.
See More
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- Acquisition Approval: Rocket Lab announced it has received regulatory approval from Germany's Federal Ministry for Economic Affairs and Energy to acquire laser optical communications terminal provider Mynaric, with the transaction expected to close in April, significantly enhancing its support capabilities in the German and European space markets.
- Strategic Importance: This acquisition will further solidify Rocket Lab's position as a leading launch service provider, as laser communication technology offers higher data rates and security for satellite constellations, addressing the growing market demand.
- Production Capacity Enhancement: Rocket Lab intends to integrate Mynaric's optical terminals to improve production efficiency, ensuring customers receive their products on time and within budget, thereby boosting customer confidence and expanding market share.
- European Market Expansion: Mynaric will continue to operate from its headquarters in Munich post-acquisition, marking Rocket Lab's first footprint in Europe and further extending its influence in international space projects.
See More
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- SpaceX IPO Outlook: SpaceX is preparing to file its IPO prospectus, potentially becoming the largest IPO in history by raising $75 billion and achieving a valuation of $1.75 trillion, which may make other space companies appear cheaper and attract investor interest.
- AST SpaceMobile Reaction: Following the SpaceX news, AST SpaceMobile's stock surged by 10.4%, but it subsequently fell by 8.5% on Thursday, indicating investor concerns over its valuation at 325 times sales amidst a lack of earnings.
- Rocket Lab Performance: Rocket Lab's stock also rose by 10.3% due to the SpaceX announcement but dropped 9.5% afterward; despite its consistent revenue growth and potential profitability next year, its valuation at nearly 60 times sales remains high.
- Investor Caution: While the SpaceX IPO prospect has generated market excitement, investors are showing caution towards the high valuations of AST SpaceMobile and Rocket Lab, reflecting uncertainties about the future of the space industry.
See More
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- IPO Anticipation: SpaceX is expected to file its IPO prospectus within days, aiming to raise $75 billion, which would make it the largest IPO in history with a valuation of $1.75 trillion, potentially overshadowing other space companies.
- Market Reaction: The news of SpaceX's IPO sparked investor enthusiasm, with AST SpaceMobile shares rising 10.4% and Rocket Lab increasing by 10.3%, indicating strong market interest and confidence in the aerospace sector.
- Price Volatility: However, the following trading day saw AST SpaceMobile and Rocket Lab stocks drop 8.5% and 9.5%, respectively, reflecting investor concerns over high valuations and rapid shifts in market sentiment.
- Investment Advice: While Rocket Lab shows stable revenue growth and is expected to be profitable next year, its stock trades at nearly 60 times sales, prompting investors to carefully assess their buying decisions to avoid entering at inflated prices.
See More
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- Strategic Partnership: Starfighters Space has signed a Technical Interchange Agreement with Blackstar Orbital to advance flight testing of reusable hypersonic 'SpaceDrone' systems, with captive carry tests expected in Q4 FY26, marking a critical transition from simulation to real-world flight testing that could propel the development of a new class of reusable satellites.
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- Innovative Technical Interface: Starfighters has provided a specialized BL75 pylon as the structural interface between the F-104 and the SpaceDrone, enabling phased captive carry and eventual release testing, thereby enhancing its technical capabilities in the aerospace sector.
- Expanding Market Potential: With the U.S. Space Force budget reaching $40 billion, hypersonic testing and reusable space systems are emerging as one of the fastest-growing segments in the aerospace and defense market, and this partnership will further solidify Starfighters' position in this rapidly evolving landscape.
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