Bank of America has maintained its "Buy" rating on Rocket Lab USA, Inc. (RKLB.US) with a $115 price target, despite some business segments slightly missing Wall Street expectations. Analyst Ronald Epstein described potential near-term stock weakness from the revenue miss as "a particularly attractive buying opportunity," citing strong growth in the Space Systems division, record backlog, and a more robust third-quarter revenue outlook.
Launch Services segment weighed on Rocket Lab's second-quarter revenue, which came in at $234.1 million, up 62% from $144.5 million in the same period last year. This result exceeded BofA's estimate of $228 million but slightly missed the consensus estimate of $237 million cited in the bank's report. The shortfall was primarily tied to the Launch Services division, where revenue declined about 4% year-over-year to $44.6 million. In contrast, the Space Systems segment saw revenue surge to $189.5 million from $97.9 million a year earlier, according to the company's quarterly filing with the SEC. BofA noted that Space Systems revenue significantly exceeded its estimate of $165 million, driven by work on the U.S. Space Development Agency's Tranche II and III programs and Rocket Lab's spacecraft components business. The bank also pointed to signs that the launch revenue weakness could be temporary, as Rocket Lab reported securing more than $437 million in new launch contracts for its Electron, HASTE, and Neutron rockets during and after the second quarter, pushing its launch backlog past 90 missions.
As of the end of the quarter, Rocket Lab's total backlog reached a record $2.36 billion, surging 137% year-over-year. According to the company's SEC filing, approximately 45% of this backlog is expected to be recognized as revenue over the next 12 months. BofA rounded this figure to about 46% in its report, providing another reason to expect continued revenue growth beyond the latest quarter. The company also narrowed its GAAP net loss to $49.3 million from $66.4 million in the prior year, while gross profit rose to $84.6 million from $46.4 million, as per the SEC filing.
Rocket Lab forecasts third-quarter revenue between $250 million and $265 million. BofA said the midpoint represents roughly 66% year-over-year growth and exceeds the consensus estimate of $237 million cited in the report. The company also expects an adjusted EBITDA loss of $17 million to $23 million in the third quarter, compared to an adjusted EBITDA loss of $8.8 million in the second quarter, which BofA said outperformed its estimate of a $19.3 million loss and the consensus loss expectation of $22.1 million cited in the report.
The Neutron rocket is another key component of Rocket Lab's future outlook. The company said production of the rocket's first-stage tank remains on track to deliver the reusable medium-lift vehicle to the launch pad by the fourth quarter of 2026, with first-flight hardware continuing assembly, integration, and testing. BofA noted that the development timeline remains uncertain, making Neutron one of the biggest variables for investors watching the company's next growth phase. The bank's $115 price target is based on a discounted cash flow analysis through 2045, incorporating base, optimistic, and pessimistic scenarios. BofA identified production delays, Neutron development setbacks, and difficulty achieving expected acquisition synergies as downside risks to its target price. For now, the bank is choosing to overlook the weaker launch services quarter, citing the Space Systems revenue doubling, record backlog, and expectations for another quarter of rapid growth as reasons to remain bullish on Rocket Lab USA, Inc. (RKLB.US) stock's upside potential following the earnings report.
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