LONG BEACH, Calif. - Rocket Lab USA, Inc. (NASDAQ: RKLB), a provider of launch services and space systems, has secured a federal defense contract valued at up to $8 million with the U.S. Air Force Research Laboratory (AFRL) to advance its digital engineering processes and support the development of the company's new reusable rocket engine, Archimedes. The contract aims to enhance the National Security Space Launch program (NSSL).
The collaboration with AFRL will focus on 'digital engineering' (DE) concepts pertinent to Archimedes, Rocket Lab’s new engine, which is expected to power the reusable first stage of their upcoming Neutron rocket. The Neutron is designed to deliver payloads of up to 13,000 kilograms to low Earth orbit. Frank Friedl, AFRL/RQR DE Lead, underscored the significance of integrating DE into the development of launch vendors' technologies.
This partnership is part of a broader AFRL initiative to develop a digital engineering ecosystem that aims to reduce costs, schedules, and risks across Space Force programs. The contract may extend to include broader implementation of digital engineering processes within the Neutron propulsion system and to establish a DE framework for NSSL Phase 3 Lane 1 launch providers.
Rocket Lab's Founder and CEO, Sir Peter Beck, expressed enthusiasm for the partnership, highlighting its benefits for defense and industry collaboration. He emphasized the potential for the contract to streamline the integration of Neutron into the NSSL program.
The Archimedes engine is designed to be reusable, featuring an oxidizer-rich staged combustion cycle and the ability to produce up to 165,000 pounds of thrust per engine. It utilizes a combination of liquid oxygen and methane as propellants. The engine's design includes 3D-printed components, which contribute to its reusability and performance.
Rocket Lab's Neutron rocket is positioned as a cost-effective, reliable, and responsive launch service for various missions. It boasts a carbon composite structure and an innovative upper stage suitable for deploying satellite mega-constellations.
This contract with AFRL follows other Department of Defense agreements supporting Neutron's development, including a $24.35 million contract for the rocket's upper stage and a research agreement exploring cargo transport use cases.
Rocket Lab, founded in 2006, has a reputation for delivering reliable launch services and has been active in satellite manufacture and on-orbit management solutions. The information is based on a press release statement.
In other recent news, Rocket Lab USA, Inc. has secured a significant multi-launch agreement for its upcoming Neutron rocket, with the first launches scheduled for mid-2026. The company also reported a substantial Q2 revenue increase to $106 million, primarily due to the success of its Electron rocket, although Q3 revenue is projected to decrease slightly, estimated between $100 million and $105 million. Stifel, maintaining a Buy rating, has increased its price target for Rocket Lab to $15.00, while KeyBanc, maintaining an Overweight rating, has raised its price target to $11.00.
In other developments, Rocket Lab has achieved a record with its fastest contract-to-launch execution for a mission titled "Changes In Latitudes, Changes In Attitudes". The company has also been selected by NASA to conduct a study for the Mars Sample Return Program, a significant development in space exploration.
Rocket Lab continues to make strides in its operations, including the completion of testing and integration of its second Pioneer spacecraft for Varda Space Industries, Inc. The company has also announced key personnel changes, appointing Frank Klein as its new Chief Operations Officer and adding Kenneth Possenriede, a former Lockheed Martin (NYSE:LMT) executive, to its Board of Directors. These are recent developments in Rocket Lab's journey in the aerospace industry.
InvestingPro Insights
Rocket Lab's recent $8 million contract with the U.S. Air Force Research Laboratory aligns with the company's strong growth trajectory, as evidenced by InvestingPro data. The company's revenue growth of 40.95% over the last twelve months, and an impressive 71.25% growth in the most recent quarter, underscore its expanding market presence in the space industry.
InvestingPro Tips highlight that analysts anticipate sales growth in the current year, which is consistent with Rocket Lab's ongoing development of the Neutron rocket and Archimedes engine. This growth expectation is further supported by the company's robust cash position, with InvestingPro noting that Rocket Lab "holds more cash than debt on its balance sheet."
However, investors should be aware that Rocket Lab is currently trading at a high revenue valuation multiple, according to InvestingPro. This valuation reflects the market's optimism about the company's future prospects, including potential benefits from contracts like the one with AFRL.
The stock has shown significant momentum, with InvestingPro data revealing a 174.21% price return over the last three months and a 238.22% return over the past year. This performance aligns with the company's strategic developments and contract wins in the defense and space sectors.
For a more comprehensive analysis, InvestingPro offers 14 additional tips for Rocket Lab, providing investors with a deeper understanding of the company's financial health and market position.
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