One of the most promising stocks in the space sector these days is Rocket Lab (NASDAQ: RKLB). The company has been generating some solid growth in recent quarters, and its prospects for profitability may improve significantly once its larger Neutron market starts carrying larger payloads for the company and unlocks more growth opportunities. While the stock has been doing well over the past year, achieving gains of more than 85%, it's also down significantly from the highs of more than $150 that it reached back in May.
Is Rocket Lab a good growth stock to buy while it trades below $90? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia.
For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » The consensus analyst price target for Rocket Lab stock is just under $111. For it to reach that level, it would need to rise by around 34% from where it trades right now, at about $83.
If, however, the company has a successful launch of its larger Neutron rocket later this year, that may result in more upgrades from analysts and more bullishness around this space stock. Rocket Lab has been planning a Neutron launch in the fourth quarter of this year, but it may not happen until next year. Investors have been waiting years for the launch, as Neutron was first announced in 2021 with plans to launch in 2024.
But with a lot riding on it, the company is ensuring that it goes well. "Our focus is on the bigger picture and making sure that when Neutron flies, it enters service as a system ready for full-scale production and high cadence launch," said the company's CEO, Peter Beck, on its recent earnings call. Rocket Lab has exciting growth prospects ahead, as growing interest in space travel may open up many opportunities for the business.
But there is also risk to consider, given how capital-intensive the business is; the company's gross profit margins are expected to be around 30% for the current quarter, which can make it difficult for it to stay out of the red. And even on an adjusted EBITDA basis, the company still expects to incur a loss of at least $17 million for the current period. For long-term investors willing to be patient, however, Rocket Lab stock may be an intriguing buy.
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