New Target Price for Rocket Lab After $5.6 Billion Award
We've got a new plan for the aerospace firm as the shares react to a major government contract.
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Space at one time seemed so far away, and to be honest, the vast majority of what we call "outer space" still is. That said, the part of "space" that surrounds our planet has become part of our world and could even become crowded at one point.
Aside from NASA, the private sector has become much more involved. As well as many smaller firms that run satellites from an array of business and research purposes, a number of other firms now provide launch services and have become extremely efficient in doing so.
Of course, everyone has heard of Elon Musk's SpaceX and Blue Origin, which is a Jeff Bezos' operation. And Boeing BA is still a player in this space, though it could be some time before its equipment will be trusted by astronauts again after a pair saw an eight-day mission to the ISS result in beings stranded at that space station for the better part of a year, only finally being rescued by a different firm... SpaceX.
Rocket Lab Stock Background
Then there is another firm that has been a Sarge fave since back in the old "Stocks Under $10" days and has continued to be a core long position in my most active portfolio ever since. That stock, for the new readers, is Rocket Lab USA RKLB. This is a position that, through the ups and downs, I have kept readership up to date on.
From the lows of April 2024, the stock rallied to the high of January 2025, RKLB ran a scorching 861%. From that high to the lows of early March, RKLB gave back 52% of its value. As of Thursday night's close, the stock was back up 14.8% off of that low. Rocket Lab received some good news after Thursday's closing bell. The stock traded higher overnight and opened on strength this (Friday) morning.
Huge Award for Rocket Lab
For those who like to follow defense contractors, there is a website that you may or may not be aware of. I speak of defense dot gov. Every dime the Department of Defense spends, at least if it's not classified, is reported here. On Thursday afternoon, this website reported that Rocket Lab and Stoke Space Technology had been awarded a multiple-award, firm-fixed-price, indefinite-delivery/indefinite-quantity contract with a maximum cumulative ceiling of $5.6 billion.
The contract is for launch services delivering National Security Space (NSS) payloads into their intended orbits. The contract includes a four-year, two-month ordering period, which will run through June 2029. There is an option for an additional ordering period of five years. The awarding agency is the Space Systems Command Assured Access to Space (U.S. Space Force), Los Angeles Air Force Base at El Segundo, California. The award was the result of competitive bidding.
For those about to ask, for the full year of 2024, Rocket Lab generated revenue of $436.2 million, up from $244.6 million in 2023. Consensus for 2025 is for revenues of $579.7 million and for 2026 is for $894.6 million. That, of course, is before any contract like this one was factored in.
The Rocket Lab Stock Chart
Loyal readers know well that we warned that there was a closing-pennant formation evolving in February. These patterns often lead to volatile moves that can go in either direction. That is what happened. Closing pennants do not hint at which way the breakout will go. Obviously, this one went against the crowd with long-side exposure. Readers know that I added to my long position in the $16s on the way down, despite the fact that this violated my net basis. Hopefully, the stock never goes that low again. My current net basis is $7.96.
The stock has lost its 50-day SMA back in mid-February and appears to be back in a more gradual "rally mode" since bottoming on February 28. The stock never truly approached its 200-day SMA and is now in a week-long battle with its 21-day EMA where there has not yet been a winner.
Relative strength is not yet strong but has moved back into what I refer to as neutral territory. The daily MACD is not exactly where we want it, but it has improved. The histogram of the nine-day EMA has been back above zero for two weeks now and the 12-day EMA has crossed back above the 26-day EMA, which is bullish, but both of those lines remain below zero. Having all three components of the MACD above zero with the 12-day line above the 26-day line sends a stronger bullish signal.
Target Price: $30 (down from $33)
Pivot Point: $23.50 (50-day SMA)
Add: Down to the 200-day SMA ($15)
Panic: Loss of 200-day SMA
At the time of publication, Guilfoyle was long RKLB equity.
