Aerospace company Rocket Lab (RKLB) reported outstanding Q3 2024 results, beating top-and-bottom-line expectations. The company grew revenue by an impressive 55% year-over-year, reaching $105 million with a hefty backlog of $1.05 billion. Rocket Lab has achieved 12 launches year-to-date and inked new contracts worth $55 million. The company also announced a successful collaboration with NASA, completing and delivering two spacecraft for the ESCAPADE Mars mission. Looking ahead to Q4 2024, Rocket Lab forecasts a record-breaking revenue range of $125-$135 million.
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Its promising financial position, an established track record of mission success, and increasing launch capacity make it a compelling proposition for star-gazing investors.
Rocket Lab’s Taking Off
Rocket Lab is a comprehensive space service provider, offering launch services, satellite manufacturing, spacecraft components, and on-orbit management solutions to make space access more accessible and affordable. The company has developed the Electron small orbital launch vehicle and has made progress toward the larger Neutron launch vehicle for constellation deployment and various spacecraft platforms. It has three launch pads across two sites – two in New Zealand and one in Virginia.
Since its initial orbital launch in January 2018, Rocket Lab’s Electron has become the second most frequently launched U.S. rocket annually. It has successfully delivered 198 satellites into orbit. The company’s spacecraft platforms have been chosen for NASA missions to the Moon and Mars and the first private commercial mission to Venus.
A Potential $5.6 Billion Contract
The company recently signed a launch service agreement with a commercial satellite operator for multiple Neutron launches. Rocket Lab has progressed in crafting Neutron’s structures and infrastructure, including completing its Virginia Assembly, Integration, and Test (A.I.T.) facility. With Neutron, the company is strategically positioned to engage in the U.S. Space Force’s National Security Space Launch (NSSL) Lane 1 program, a contract worth $5.6 billion over five years.
Rocket Lab’s Space Systems division has performed well, completing the production and delivery of two spacecraft for NASA’s ESCAPADE mission on time and within budget. NASA has also selected the division for a study contract for a proposal to retrieve samples from Mars and return them to Earth. Further, two new spacecraft were completed for Varda Space Industries, and the company is scheduled to execute a $515 million contract with the Space Development Agency.
Rocket Lab’s Recent Financial Results
The company has reported its third-quarter results for 2024. Revenue was $106.25 million, exceeding expectations by $2.42 million and marking a 54.9% increase year-over-year. This growth was powered by significant contributions from both business segments – launch services and space systems. Launch services cost $21 million, while space systems accounted for $83.9 million, near the top end of prior guidance. Rocket Lab’s GAAP gross margin was 26.7%, while the GAAP earnings per share (EPS) was -$0.10, missing expectations by $0.01.
The company finished the quarter with a total backlog of $1.05 billion, including $326 million from launch services and $721 million from space systems – an 80% increase from the previous year. Cash and cash equivalents were $508 million.
Management has issued guidance for Q4, anticipating revenue of $125 to $135 million. GAAP gross margins are projected to be between 26% and 28%, with GAAP operating expenses expected to be between $84 and $86 million. The estimated adjusted EBITDA loss is between $27 and $29 million.
Is RKLB a Buy?
The stock has increased by 335% in the past year. It trades at the high end of its 52-week price range of $3.47 – $15.24 and shows ongoing positive price momentum as it trades above all major moving averages.
Analysts following the company have been constructive on RKLB stock. For instance, Stifel analyst Erik Rasmussen, a five-star analyst according to Tipranks’ ratings, has significantly increased his price target for the shares from $15 to $22. He notes the company’s high-end revenue, smaller-than-anticipated adjusted EBITDA loss, and Rocket Lab’s first launch contract for its Neutron rocket, indicating further potential for growth.
Rocket Lab is rated a Moderate Buy overall, based on the cumulative recommendations from seven analysts. The average price target for RKLB stock is $15.92, representing a potential downside of -15.45% from current levels.
Rocket Lab in Review
Rocket Lab is ascending to new heights with its recent stellar revenue results and a robust backlog. Furthermore, the company’s successful collaboration with NASA, successful mission track record, and expanding launch capacity point to ongoing upside opportunities. Rocket Lab’s trajectory makes it an attractive option for investors interested in the burgeoning aerospace industry.
