Morgan Stanley analyst Kristine T Liwag reiterated an Overweight rating on the shares of Rocket Lab USA IncRKLBwith a price target of $10.00.
Dedicated space companies have had a tough 2022, including Rocket Lab, said the analyst.
Space firms that listed in 2021 are down a median 66% YTD, compared to the S&P 500 down ~13%, as higher interest rates have effectively dimmed the outlook for over-the-horizon initiatives, the analyst added.
However, the analyst sees opportunity in the market’s indiscriminate treatment of Space companies and view Rocket Lab’s recent price performance (down ~66% YTD) presenting attractive risk / reward proposition.
The analyst said the company, an early space mover with real revenue, an increasingly visible growth profile and initiatives underway, could potentially upend traditional launch economics.
The analyst expects satellite manufacturers’ reduced risk appetite in the current economic environment, along with recent setbacks to global launch capacity, to provide tailwinds to the company.
The analyst views Rocket Lab as a small launch standout with exciting potential as Neutron’s development progresses and management makes headway toward long-term profitability goals while upholding its execution track record.
