Bank of America reiterates “Buy” rating on Rocket Lab (RKLB.US): Short-term launch disruptions are noise, core valuation hinges on Neutron’s maiden flight in 2026
Although some of Rocket Lab’s (RKLB.US) business performance slightly fell short of Wall Street expectations, Bank of America remains optimistic about the company, reiterating its “Buy” rating and maintaining a target price of $115.
According to Zhitong Finance APP, despite certain segments of Rocket Lab's (RKLB.US) business performing slightly below Wall Street expectations, Bank of America remains optimistic about the company, reiterating its “Buy” rating along with a target price of $115.
Analyst Ronald Epstein also described any potential weakness in Rocket Lab’s stock price following the earnings miss as “an especially attractive buying opportunity,” citing the robust growth of its Space Systems business, record backlog, and stronger revenue outlook for the third quarter.
Launch business drags down Rocket Lab’s revenue
Rocket Lab reported second-quarter revenue of $234.1 million, up 62% from $144.5 million in the same period last year. This result exceeded Bank of America’s forecast of $228 million, but was slightly below the consensus estimate of $237 million cited in the bank's report.
The main gap was tied to Rocket Lab’s “Launch Services” division, where revenue dropped nearly 4% year-over-year to $44.6 million. According to quarterly filings submitted to the SEC, Space Systems showed the opposite trend, with revenue soaring from $97.9 million in the same period last year to $189.5 million.
Bank of America noted that revenue from the Space Systems business greatly exceeded its own estimate of $165 million, driven by work related to the U.S. Space Development Agency's Tranche II and III programs and Rocket Lab’s spacecraft components business.
The bank further pointed out that signs suggest the weakness in launch revenue may be temporary. During and after the second quarter, Rocket Lab secured over $437 million in new launch contracts for Electron, HASTE, and Neutron rockets, pushing its launch backlog above 90 missions for the first time.
According to the company, Rocket Lab’s total order backlog reached a record $2.36 billion by the end of this quarter, up 137% year-over-year. SEC filings show approximately 45% of these backlog orders are expected to be recognized as revenue in the next 12 months.
Bank of America rounded this figure to approximately 46% in its report, which provides another reason for expecting ongoing revenue growth following the latest quarter.
The company also narrowed its GAAP net loss from $66.4 million in the same period last year to $49.3 million. According to Rocket Lab’s SEC filing, gross profit rose from $46.4 million to $84.6 million.
Bank of America forecasts further growth for Rocket Lab
Rocket Lab expects third-quarter revenue to range from $250 million to $265 million. Bank of America noted that at the midpoint, this represents roughly 66% year-over-year growth and surpasses the consensus estimate of $237 million cited in the report.
The company also expects its adjusted EBITDA loss for the third quarter to be between $17 million and $23 million. Previously, second-quarter adjusted EBITDA loss came in at $8.8 million, which Bank of America said was better than its estimate of $19.3 million and beat the consensus loss of $22.1 million cited in the report.
The Neutron rocket is another key component of future outlook. Rocket Lab stated that production of the first-stage tank remains on schedule to ensure the reusable medium-lift rocket makes it to the launch pad in the fourth quarter of 2026, while first flight hardware continues its assembly, integration, and testing.
Bank of America noted that uncertainty surrounding the development timeline remains, making Neutron one of the biggest variables for investors observing the company’s next stage of growth.
The bank’s $115 target price is based on discounted cash flow (DCF) analysis through 2045, including base, optimistic, and pessimistic scenarios. Bank of America believes production delays, setbacks in Neutron development, and challenges realizing anticipated acquisition synergies present downside risks to its target.
For now, the institution chooses to look past this weaker quarter for the launch business. With Space Systems revenue doubling, backlog reaching new records, and another quarter of rapid growth expected, Bank of America remains bullish on Rocket Lab’s stock upside potential following the earnings report.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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