Investing.com -- Rocket Lab shares climbed 6.5% following a bullish update from Citi analysts, who increased their price target for the aerospace manufacturer to $35, setting a new Street high. The revised target reflects Citi's confidence in Rocket Lab's growth trajectory, particularly after recent contract awards for the company's Neutron launch vehicle.
Citi's optimism is grounded in several key indicators that investors were watching closely this quarter. These include expected award announcements, particularly from the US government, progress on Neutron development milestones, and the commercial outlook in the space systems segment. Analysts at Citi have adjusted their valuation model, raising the price-to-sales multiple from 11.3 to 15, aligning Rocket Lab with its peers in high-growth technology and defense sectors. This adjustment comes as the Neutron launch vehicle garners significant attention, with contract wins enhancing the company's revenue prospects.
The key debates surrounding Rocket Lab's stock revolve around the timing of the Neutron development milestones, the company's ability to scale in the Satellite Systems business, and the long-term capital intensity as it expands to offer a broader range of services from space. Potential catalysts that could further influence the stock price include announcements related to Neutron's development and order flow, particularly for the Launch segment.
Citi's report also introduces forecasts for the year 2027 into their financial model for Rocket Lab. This forward-looking approach suggests a long-term vision for the company's financial health and market position.
While the raised price target by Citi is a significant factor behind the stock's rise, investors will continue to monitor Rocket Lab's performance against these expectations and the company's ability to meet its outlined milestones and growth targets.
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