Analyst says buy these two space stocks amid SpaceX-driven sell-off

SpaceX’s historic debut on Nasdaq sparked a classic “capital siphon” effect, triggering a sharp sell-off across other space stocks.

As billionaire Elon Musk’s rocket company soared past a US$2 trillion (approx. $2.8 trillion) valuation, institutional and retail investors trimmed their holdings to free up liquidity and initiate positions in SPCX shares.

According to KeyBanc’s senior analyst Michael Leshock, however, this SpaceX-driven weakness in the likes of Rocket Lab RKLB and Firefly Aerospace (FLY) presents a premier buying window.

For investors seeking exposure to the rapidly expanding commercial space sector backed by rising institutional demand, those two names standout as prime candidate for a sharp rebound.

Why KeyBanc is bullish on Rocket Lab stock

According to Michael Leshock, RKLB stock presents an exceptionally rare, well-capitalized pure-play opportunity in an environment where launch infrastructure remains structurally constrained.

Despite the recent sell-off, the company’s long-term growth trajectory remains firmly intact – the analyst told clients as he issued a $135 price target on its stock.  

His ambitious estimate signals Rocket Lab could rally another 25% from here as the year unfolds.

Investors should also note that RKLB also stands to benefit from its inclusion in the “Nasdaq 100” next week, as index inclusion often accelerates demand from passive funds and ETFs.

All in all, a solid US$2.2 billion (approx. $3.1 billion) backlog and tight alignment with critical national security and NASA priorities make Rocket Lab “clear No. 2” in the commercial space sector (after SpaceX), Leshock added.

Why KeyBanc is bullish on Firefly stock

Firefly stock represents another highly compelling idiosyncratic growth vector within the growing space sector, with KeyBanc calling for a rally to $50 by year-end.

In his research note, Leshock said the Nasdaq-listed firm is uniquely positioned to capture lucrative federal market share as modern defense programs and NASA initiatives ramp up expenditures at an unprecedented pace.

Beyond government alignment, his optimism is rooted in Firefly’s rapid operational maturity since its public debut last August.

The company’s versatile launch vehicles and orbital vehicles directly address the “structural launch supply deficit” plaguing the industry.

By providing reliable, dedicated medium-launch capabilities, FLY bridges the gap for commercial and defense clients who are desperate to “bypass” congested manifestation bottlenecks – giving it immense pricing power and a clear runway to exponential revenue growth.

Capitalizing on the broader space acceleration

The temporary pullback across the space ecosystem, exemplified by a dip in the iShares Aerospace & Defense ETF, masks a profound fundamental shift.

KeyBanc points out that modern space exploration and satellite deployment activity are increasing at a velocity reminiscent of the Apollo era.

With exponential demand for satellite constellations and space-based data applications colliding with a severe global shortage of launch supply, well-fortified commercial operators hold immense pricing power.

All in all, the massive influx of institutional capital triggered by SpaceX’s historic multi-trillion-dollar listing will inevitably flow toward proven, scalable alternatives like Rocket Lab and Firefly, the firm concluded.