$RKLB Diamonds in the Rough’: Analysts Say These 2 Space Stocks Could Skyrocket Over 100%
As recently as the 1990s, space exploration and travel were the exclusive domain of national or transnational governments. But in recent years private companies have begun cutting into that governmental dominance – and their encroachment is opening up vistas of opportunity for risk-tolerant investors.
Some estimates put the eventual value – say, by the 2030s – of the private space industry at $1 trillion or more. Potential sectors that investors should watch are space tourism, satellite launching, geospatial imaging, solar power generation, possibly even asteroid mining.
So, let’s take a look at two space stocks, potential winners at two very different ends of this arena. But for all their differences, both are considered Strong Buys on Wall Street, and both offer investors opportunity for triple-digit upside in the coming year, according to TipRanks' database.
Rocket Lab USA, Inc. (RKLB)
We’ll start with Rocket Lab, a firm working in the space-launch segment and a leader in the development of reusable small-payload launch vehicles. This is a high-potential niche, combining two major trends in orbital space travel – and Rocket Lab has taken a strong position. The company’s Electron rocket, its flagship launch vehicle, is capable of putting a 300 kilogram payload into low Earth orbit, and over the course of 32 launches has successfully deployed 152 satellites. Electron is currently the only reusable small launch vehicle in service, and Rocket Lab is working to supplement its capabilities through development of the larger Neutron rocket – an ambitious program that will see a reusable rocket capable of putting a 13,000 kilo payload into Earth orbit, or carrying 1,500 kilograms to Mars or Venus.
Rocket Lab has been launching its missions from its New Zealand facility, but starting this month it will also be able to launch Electron rockets from US soil. The company has scheduled its first US launch from a launch complex at the Virginia Space Mid-Atlantic Regional Spaceport of the NASA Wallops Flight Facility on January 23. The US launch site will facilitate Rocket Lab’s work with customers from the US, both government and commercial entities. Overall, Rocket Lab hit 9 successful launches in 2022, a company record for one calendar year.
The company’s revenues have been showing consistent quarter-over-quarter gains. In the last reported quarter, 3Q22, the company showed a top line of $63.1 million, for a gain of 14% sequentially – and an impressive 1,093% year-over-year.
Covering this space launch firm for Morgan Stanley, analyst Kristine Liwag describes Rocket Lab as a ‘diamond in the rough,’ and writes: “We see opportunity in the market’s indiscriminate treatment of Space companies and view RKLB’s recent price performance presenting attractive risk / reward proposition for an early space mover with real revenue, an increasingly visible growth profile and initiatives underway that could potentially upend traditional launch economics."
"Moreover," the analyst added, "we expect satellite manufacturers’ reduced risk appetite in the current economic environment, along with recent setbacks to global launch capacity, to provide tailwinds to RKLB given its relatively strong space heritage (2nd most launched US rocket). We continue to view RKLB 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.”
Liwag doesn’t just write up an optimistic outlook, he backs it with an Overweight (i.e. Buy) rating on RKLB shares and a $10 price target that implies a one-year upside potential of 101% from current levels. (To watch Liwag’s track record, click here)
While the Morgan Stanley outlook is bullish, the Street generally is even more so. Rocket Lab has 7 recent analyst reviews, with a 6 to 1 breakdown favoring Buys over Holds – and the $10.96 average price target implies a 120% upside over the next 12 months, from the current trading price of $4.97. (See RKLB stock forecast)........
Market Data 
Markets 
AI
