Rocket Lab USA Inc (RKLB) shares are taking off, reaching new 52-week highs on Monday, adding to their impressive gains of over 25% in the past week. The company is riding the wave of optimism in the broader markets and the anticipation for its upcoming third-quarter earnings report, due out this week. Here’s a closer look at the key factors driving RKLB’s surge and what investors should keep an eye on:
A Tailwind of Favorable Conditions:
The broader market is experiencing a strong rally, with risk assets hitting all-time highs following Donald Trump’s election win. This positive sentiment is fueled by the expectation of a more favorable regulatory environment for businesses under Trump’s administration. The private space industry is particularly optimistic, especially considering SpaceX CEO Elon Musk’s close ties to Trump and his vocal support for the sector.
Reuters reports that changes to the Federal Aviation Administration’s commercial space office, which oversees private rocket launches, are a possibility under the new administration. This potential shift could further benefit companies like Rocket Lab.
Adding to the positive backdrop, growth stocks have been buoyed by the Federal Reserve’s recent rate-cutting cycle. Last week, the Fed slashed interest rates by 0.25%, bringing the target fed funds rate to its lowest level since February 2023. The market anticipates another 0.25% rate cut at the Fed’s final meeting of the year next month.
Q3 Earnings in Focus:
Rocket Lab is set to release its third-quarter financial results after the market close on Tuesday. Analysts are expecting a loss of 11 cents per share and revenue of $102.28 million, according to estimates from Benzinga Pro.
In the previous quarter, Rocket Lab surpassed analyst expectations on both the top and bottom lines, reporting a 71% year-over-year jump in revenue. The company provided guidance for third-quarter revenue in the range of $100 million to $105 million and an adjusted EBITDA loss between $31 million and $33 million.
Neutron Rocket in the Spotlight:
Investors will be closely watching for updates on the company’s ambitious medium lift rocket, Neutron. Rocket Lab announced the successful hot fire of Neutron’s Archimedes engine when it reported earnings last quarter. The first flight of Neutron is scheduled for sometime in mid-2025.
Analyst Sentiment Remains Positive:
In the days leading up to the earnings report, Citigroup analyst Jason Gursky maintained his Buy rating on Rocket Lab and raised the price target from $7 to $13, reflecting the analyst’s confidence in the company’s future prospects.
Price Action and Outlook:
Rocket Lab shares closed at $14.99 on Monday, up 11% for the day, highlighting the strong investor interest in the company. As Rocket Lab prepares to report its third-quarter earnings, the market will be looking for signs of continued growth and progress on the Neutron program, which could propel the stock even higher in the coming months.
