Rocket Lab's Stock Could Surge 250% as the Company Takes a Page Out of Spacex's Book, Analyst Says

Morgan Stanley says the bull case for the rocket-launch stock is now much rosier as the company diversifies its business

Rocket Lab is known for its rocket-launch business, but its space-systems division generates much more revenue.

Rocket Lab is following a well-worn path by SpaceX, which has analysts cheering on its future as an "emerging space platform."

Morgan Stanley analysts on Wednesday raised their bull-case target price for the company's stock to $293 from $185, noting that Rocket Lab (RKLB) is increasingly resembling a miniature SpaceX $(SPCX)$. That implies upside of 259% from current trading levels on Wednesday.

Analysts led by Kristine Liwag pointed to Rocket Lab's push to diversify beyond launching rockets, opening up lucrative new opportunities.

"SpaceX has demonstrated that the greatest value creation in the space economy comes not from launch alone, but from owning differentiated space-based infrastructure and monetizing recurring, high-margin services built on top of it," Liwag said in a note to clients.

Rocket Lab is well aware of that. Despite its space-systems division being, as CFO Adam Spice put it last month, "less sexy" than launching rockets, it makes a lot more money.

Space systems accounted for 67% of Rocket Lab's revenue last year and made up more than half of its contracted backlog as of March 31. Morgan Stanley said the division could grow at a 38% compound annual rate through 2028.

The space-systems division makes spacecraft and related components. In recent months, Rocket Lab has gone on an acquisition spree to bolster its work, buying the space robotics firm Motiv Space Systems and laser-optical-communications company Mynaric.

Last week, Rocket Lab entered a deal to buy Iridium Communications $(IRDM)$, which it called a "shortcut," allowing it to develop space-based applications. Iridium owns valuable spectrum licenses and offers satellite-internet services to millions of subscribers, but it isn't seen as a direct rival to SpaceX's Starlink.

"We believe the transaction materially enhances Rocket Lab's strategic positioning by expanding its presence beyond launch into satellite connectivity," Liwag said. The deal, she added, could move Rocket Lab closer to SpaceX's vertically integrated model.

Despite boosting bull-case expectations, Morgan Stanley on Wednesday maintained a $105 price target and overweight rating on Rocket Lab's stock in its base case. A day earlier, the firm began covering SpaceX's stock with a $300 target and a bull-case view that could see it climb as high as $600. SpaceX's stock trades at about $150 as of late morning on Wednesday.

SpaceX utilizes an industry-dominating launch business to support Starlink and, eventually, its artificial-intelligence wing. The connectivity business has so far proven to be its strongest arm, although recent deals may boost its AI division.

On Tuesday, SpaceX asked U.S. regulators to allow it to deploy 100,000 satellites powering "human connectivity and AI-fueled progress." Earlier this year, SpaceX's request for a smaller expansion was given the thumbs-up. It separately filed to launch up to 1 million AI satellites.

Entertaining the idea of such a large constellation would be a tough sell for almost any company. SpaceX, assuming it can get its Starship rocket up and running for commercial use, has an edge. It expects Starship to begin delivering payloads by the end of the year, enabling it to send up to 60 of its V3 satellites to orbit at a time.

Rocket Lab also has a new rocket in the works. It aims to launch its Neutron medium-lift rocket for the first time later this year, which would allow Rocket Lab to send larger payloads to space. Its current rocket is the Electron, a small-lift vehicle.

"Ultimately, we want to use Neutron for our own needs," Spice said at a Wells Fargo conference in June, adding that the rocket is important for both Rocket Lab's launch business and its "constellation ambitions."

-William Gavin

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July 08, 2026 12:01 ET (16:01 GMT)

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