Rocket Labs’ Neutron launch delay sent 27% off the selloff, but shares have partially recovered.
The third quarter saw record revenue of $155 million, 17 electron contracts, and a $1 billion backlog.
Analyst consensus rates it a moderate buy with a high target price, indicating solid upside for investors.
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Rocket Laboratory (NASDAQ: RKLB ) One of the most promising bull runs was in 2025 – until an announcement caused the stock to crash more than 27% in one month.
Some investors think of Rocket Lab as “SpaceX-lite”, operating in the same ring (reusable rockets) but in different weight classes (SpaceX mostly does medium-to-heavy-lift and mega-constellation launches, while Rocket Lab focuses on small-satellite launches).
Rocket Lab’s Neutron was set to change all that. The medium-lift rocket increases its payload mass to 13,000 kg for low Earth orbit (LEO), making it a viable option for SpaceX’s medium-lift customers who don’t need the full Falcon 9 experience.
However, according to third quarter financial statements released on November 10, Rocket Lab “updated” its neutron launch schedule from late 2025 to the first quarter of 2026.
And I get it – this kind of delay can scare investors and shatter market confidence. However, for those silver-lining types, this downtrend actually presents a great entry opportunity for this growth stock. Here is the reason.
First, let’s focus on the third quarter financial statements. Rocket Lab secured 17 Electron launch contracts in the third quarter, with the Electron being its small-lift rocket. For reference, Rocket Lab had only 12 Electron launches in the entire nine-month period of 2024, around this time last year. This shows a large scaling.
The company also reported an impressive 48% top-line growth to a record $155 million. Gross margin (on a GAAP basis) also improved to 37%. It reported higher revenue and R&D costs for the quarter, although this was mostly offset by certain tax benefits. As a result, net loss was lower at $0.03 per share.
CEO Sir Peter Beck also said the company has a “$1.05 billion backlog”, indicating strong demand and a solid foundation for future revenue growth. On top of that, it announced a new federal defense contract with the US Air Force Research Laboratory for its Neutron rocket and Archimedes reusable engine development.
Along with other previous deals with the United States and Britain, this proves that Rocket Lab is an increasingly viable on-ramp for larger defense contracts.
As previously mentioned, Rocket Lab announced a delay in its Neutron launch in its latest fiscal year. And by November 10 the stock was already in a slight decline, with the announcement dropping it from about $52 to $39. That said, we’re already seeing some recovery, with Rocket Lab stock trading at the high end of $47 today.
Still, at current prices, the stock trades at more than 36 times earnings (price-to-sales ratio). That’s quite a premium – exorbitant and prohibitive for something. However, this premium could be justified if Rocket Lab maintains its growth momentum, especially if it converts a good portion of its backlog into recurring revenue. Fourth-quarter revenue is already expected to come in between $170 million and $180 million, representing significant sequential and year-over-year growth.
And finally, the company operates in an area with a potential total addressable market of $10 billion by 2030. If it can capture a good slice of that pie and keep it, we could be looking at a multi-billion dollar growth story in the making.
The consensus among 15 analysts rates Rocket Lab stock a moderate buy with an average score of 4.13, up from 4.07 two months ago. That means despite the neutron delay, Wall Street is scoring Rocket Lab highly, highlighting its strong growth potential despite short-term headwinds. The high target price is $83, which suggests about 77% potential upside in the stock over the next year.
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Rick Orford has no position in any of the stocks mentioned. The Motley Fool has posts and recommends Rocket Lab. Motley Fool has a disclosure policy.
1 Growth Stocks Down 27% Buy Now Originally published by The Motley Fool
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