Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Position Status | Return(%)* |
|---|---|---|---|---|---|---|---|---|
| 23 Jul, 25 | RKLB | Buy | USD 48.21 | USD 51.3 | USD 58.0 | 22 days | Closed |
10.39%
|
*Return(%) represent the percentage change between the entry price and exit price of the recommendation.
Data Powered by EOD Historical Data (“EODHD”).
Rocket Lab USA, Inc., a space company, provides launch services and space systems solutions for the space and defense industries. The company provides launch services, spacecraft design services, spacecraft components, spacecraft manufacturing, and other spacecraft and on-orbit management solutions; and constellation management services, as well as designs and manufactures small and medium-class rockets. It also designs, manufactures, and sells Electron, a reusable orbital-class small rocket; and the Photon satellite platforms, as well as developing the Neutron 8-ton payload class launch vehicle; conducts remote launch activities; and designs and manufactures a range of components and subsystems for the Photon family of spacecraft and broader merchant spacecraft components. The company serves commercial, aerospace prime contractors, and government customers. Rocket Lab USA, Inc. was founded in 2006 and is headquartered in Long Beach, California.
Backlog Strength: The total contracted backlog stood at USD 1.067 billion at the end of Q1 2025, with 56% expected to convert within the next 12 months, providing strong future revenue visibility
Revenue Growth: Rocket Lab’s revenue rose 32.1% YoY to USD 122.6 million in Q1 2025 from USD 92.8 million in Q1 2024, driven by increased launch volume and Space Systems contributions
EBITDA Loss Expansion: Adjusted EBITDA loss increased from USD 23.2 million in Q4 2024 to USD 30.0 million in Q1 2025, reflecting higher R&D and operational costs amid declining sequential revenue
Free Cash Flow Deterioration: Non-GAAP free cash flow declined substantially to -USD 82.9 million in Q1 2025 from -USD 23.9 million in Q4 2024, indicating increased cash burn due to infrastructure investment and working capital needs
Rocket Lab’s high cash burn and dependence on government contracts expose it to significant liquidity and execution risks, particularly if program timelines slip or funding is delayed
| Entry Price | Support* | Target 1** | Target 2** |
|---|---|---|---|
| 48.21 | 43.2 | 51.3 | 58.0 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
**Target prices may vary by ±0.5% depending on market volatility.
Strong Revenue Growth and Operational Performance: Rocket Lab reported a notable revenue of USD 122.6 million in Q1 2025, representing a 32.1% year-over-year increase compared to USD 92.8 million in Q1 2024. This performance marked one of the company's highest quarterly revenues to date, primarily driven by the successful execution of five Electron launches and the expansion of its Space Systems business. The launch cadence, which included three missions within 13 days, highlights operational efficiency and growing market demand.
Strategic Contracts and Government Engagement: During the quarter, Rocket Lab secured multiple high-value government contracts, reinforcing its role in national defense and aerospace. The company was selected for the U.S. Space Force’s National Security Space Launch (NSSL) Phase 3 Lane 1 program, a USD 5.6 billion contract spanning through 2029. Additionally, it earned a new contract with the U.S. Air Force Research Laboratory to support advanced rocket transportation testing. These contracts not only boost revenue potential but also validate Rocket Lab’s growing credibility as a dependable defense partner.
Technological Advancement Across Launch Platforms: The company achieved significant progress on its Neutron launch vehicle development, with Stage 2 qualification completed and Stage 1 qualification underway. Infrastructure at Launch Complex 3 in Virginia is on track, and dual Archimedes engine test cells are now operational, doubling testing capacity. These milestones suggest Rocket Lab is on schedule to achieve its first Neutron launch, reinforcing its position in the medium-lift launch market segment.
Continued Expansion in Space Systems: Rocket Lab’s Space Systems division continues to scale with developments like the launch of the third Pioneer spacecraft for Varda and product innovations such as customizable solar arrays (StarRay) and MAX constellation management software. The company's ongoing acquisition of Mynaric, a provider of laser communication terminals, further supports its ambition to vertically integrate and deliver end-to-end space solutions.
Rising Expenses and Cash Burn Concerns: Despite strong top-line growth, Rocket Lab reported a sequential decline in revenue of 7.4% and a widening of losses. Adjusted EBITDA loss rose to USD 30.0 million in Q1 2025 from USD 23.2 million in Q4 2024. Non-GAAP free cash flow deteriorated significantly to -USD 82.9 million from -USD 23.9 million the previous quarter, driven by higher Neutron infrastructure spending and delayed SDA program receipts. These figures reflect the capital-intensive nature of Rocket Lab’s expansion and its reliance on timely customer payments and funding.
Financial Outlook and Guidance: For Q2 2025, Rocket Lab expects revenue between USD 130 million and USD 140 million, with both GAAP and Non-GAAP gross margins anticipated to improve due to better launch pricing and operational leverage. GAAP operating expenses are forecasted to range between USD 96 million and USD 98 million. Adjusted EBITDA loss is projected between USD 28 million and USD 30 million, consistent with Q1 levels, indicating continued R&D investment and infrastructure buildout.
Corporate Restructuring for Strategic Flexibility: Rocket Lab is undergoing a legal restructuring that will see Rocket Lab Corporation replace Rocket Lab USA, Inc. as the publicly traded entity under the same ticker (RKLB). All existing shares will be exchanged on a 1:1 basis, ensuring no change to shareholder ownership or rights. This transition is aimed at enabling broader international expansion and optimizing the company’s corporate strategy in alignment with its evolving business landscape.
Technical Commentary:
RKLB's stock price has been experiencing a significant upward move recently and may continue its upward trajectory in the near term. Additionally, the stock is trading above its 21-period and 50-period Simple Moving Averages, which could serve as short-term support levels. Overall, these technical indicators suggest the potential for further gains, provided the price stays above these key support levels.
As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Buy’ rating has been given to Rocket Lab Corp. (NASDAQ: RKLB) at its current market price of USD 48.21 as of July 23, 2025 (6:35 am PDT)
Data Powered by EOD Historical Data (“EODHD”).
Sector: Industrials Industry: Aerospace & Defense
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| RKLB Rocket Lab USA Inc. |
-1.725 3.11% | 53.77 | - | - | 7.46 | 3.29 | 7.18 | -11.8537 |
| BA The Boeing Company |
1.19 0.58% | 207.90 | - | 294.12 | 1.68 | - | 2.25 | 111.56 |
| EADSY Airbus Group NV |
-0.99 1.74% | 55.89 | 27.76 | 21.51 | 1.93 | 7.21 | 1.79 | 13.93 |
| EADSF Airbus Group SE |
-2.0 0.89% | 224.00 | 27.24 | 21.28 | 1.91 | 7.14 | 1.79 | 13.93 |
| RTX Raytheon Technologies Corp |
-2.715 1.51% | 177.22 | 38.65 | 15.77 | 1.77 | 1.69 | 2.22 | 16.02 |
Data Powered by EOD Historical Data (“EODHD”).
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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