Rocket Lab stock analysis: megaphone forms as experts remain optimistic

Rocket Lab stock has remained volatile in the wake of the highly anticipated SpaceX IPO and its blockbuster Iridium acquisition. Shares surged to $151 ahead of the IPO before tumbling to $80.50, and have since recovered to around $100. Despite the wild price swings, top analysts continue to maintain a bullish outlook on the company.

Analysts are bullish on Rocket Lab stock

The RKLB stock has been highly volatile in the past few weeks, even as top analysts have maintained their bullish outlook. Citigroup reiterated its outperform rating, while Bank of America hiked the target from $105 to $115, 

Citizens Bank hiked from $95 to $130, while Needham and Roth MKM boosted the target to $120 and $130, respectively.

The general view is that the company’s business will continue doing well, especially with the recent Iridium acquisition. Rocket Lab is paying $8 billion for the company, calling it the most transformative deals in the space industry. It will merge its capabilities in launching and satellite manufacturing with Iridium’s global satellite communications network.

The deal helps the company achieve its goal of vertical integration, creating a company spanning launch, spacecraft, spectrum, and on-orbit communications. As a result, it expects to eliminate third-party launch costs.

Additionally, the deal helps Rocket Lab to unlock entry to space applications and provides access to globally coordinated spectrum.

Iridium’s business has been growing steadily, with its annual revenue rising from $614 million in 2021 to $871 million last year. At the same time, it has managed to move from a loss of $9.3 million in 2021 to $114 million last year. 

It has an encouraging gross margin of 71% and a net income margin of 12%, meaning that Rocket Lab has room to grow it. In contrast, Rocket Lab’s gross profit margin is fairly thinner at 36%.

RKLB’s growth to accelerate

Analysts are optimistic that Rocket Lab’s revenue growth will accelerate in the coming years as it launches its Neutron product. The average estimate is that its second-quarter revenue will come in at $231 million, up by 60% YoY. 

They also expect the third-quarter revenue to soar by 52% to $236 million. For the year, analysts believe that revenue will jump by 51% to $914 million, followed by $1.3 billion next year. This growth is driven by its growing market share in government and civilian launches. For example, it is one of the firms taking part in the Golden Dome project.

The most recent numbers showed that Rocket Lab’s backlog jumped to $2.2 billion, with its revenue soaring by 63.5% to $200.3 million. Its management noted that its Neutron order book was rising, with the manifest filling up through to the end of the decade.

RKLB stock price technical analysis

RKLB stock chart | Source: TradingView

The weekly chart shows that the Rocket Lab stock has been in a strong bull run in the past few years. Along the way, the stock has formed a giant megaphone pattern, a common bullish continuation sign.

The stock’s volatility is also being seen in the widening Bollinger Bands. It remains slightly above the middle line of the bands. 

Therefore, the stock will likely be highly volatile in the near term. It may drop to the lower side of the megaphone ahead of rebounding, potentially to the all-time high of $150.