Rocket Lab USA is a buy, Roth Capital says

Following guidance from the company, Roth MKM analyst Suji Desilva has maintained his “Buy” rating on Rocket Lab USA (Rocket Lab USA Stock Quote, Chart, News, Analysts, Financials Nasdaq:RKLB).

On September 26, RKLB issued a press release revising its guidance for the upcoming third quarter. The company said it now expects revenue of $66 to $68-million instead of the $73 to $77-million it had previously expected.

The analyst says this setback should quickly be forgotten in light of the company’s history of execution.

“With the recent in-space anomaly resulting in a failure of RKLB’s 41st Electron mission back on September 19th, RKLB announced it would delay its next Electron mission pending investigation outcome/actions,” he explained. “We believe RKLB is working diligently under the oversight of the FAA to fully investigate the anomaly and implement corrective measures. Nonetheless, we have reduced our 3Q23 revenue estimate by ~$8m to reflect one less launch in the quarter (i.e., two launches instead of three). We note that RKLB’s space systems revenue, which includes its direct-to-smartphone satellite constellation work on behalf of a flagship smartphone vendor, was guided to be in line with prior growth expectations. We have left our forward launch estimates for 4Q23 unchanged, assuming an unchanged five launches in the quarter. We see risks to this 4Q23 launch forecast as equally balanced with potential for an inclusion of the additional pushed out launch balanced with the unknown delay length related the current investigation. Given the company’s track record of 37 successful missions to date, which placed over 170 satellites in orbit, we remain confident that RKLB will quickly conclude the investigation and put corrective measures in place.”

In a research update to clients September 27, Desilva maintained his “Buy” rating and one-year price target of $10.00 on RKLB.

The analyst thinks Rocket Lab will generate revenue of $281.9-million in fiscal 2023 and $378.0-million the following year.