Rocket Lab USA: Prime Defense Contract Win and Growing Backlog Underpin Upgraded Buy Rating and $90 Target

In a report released today, Ryan Koontz from Needham reiterated a Buy rating on Rocket Lab USA, with a price target of $90.00.

Ryan Koontz has given his Buy rating due to a combination of factors tied to Rocket Lab USA’s recent defense contract win and growth outlook. He highlights that Rocket Lab secured an approximately $805 million award as a prime contractor for the Space Development Agency’s Tracking Layer Tranche 3, marking the largest contract in the company’s history and a strong endorsement of its capabilities as a defense prime. The deal significantly expands the company’s Space Systems backlog, more than doubling it from prior levels, and Koontz notes that there is additional upside potential from supplying satellites and components to other prime contractors, which could bring the total opportunity to around $1 billion.

Koontz also points out that this award comes after a competitive and delayed procurement process, reinforcing Rocket Lab’s positioning among established defense peers that shared the remaining contract value. With execution on Tranche 2 underway, the ramp-up of Tranche 3 ahead, and the upcoming inaugural launch of the Neutron rocket, he believes Rocket Lab has multiple near- and medium-term catalysts to drive revenue growth and investor interest. In light of these developments and the improving visibility into future defense-related cash flows, Koontz reiterates his Buy rating and raises his price target to $90, reflecting increased confidence in the company’s long-term value potential.

In another report released on December 19, Stifel Nicolaus also reiterated a Buy rating on the stock with a $85.00 price target.