Key Takeaways
- TD Cowen cut its Rocket Lab price target from $120 to $90 on October 9 but maintained its Buy rating, implying approximately 32% upside from the referenced $68.44 share price.
- Rocket Lab stock closed October 8 roughly 54.5% below its May peak as investors weighed Neutron’s timeline, cash burn, and SpaceX competition.
- At $90, Rocket Lab would trade at approximately 46.7 times forward sales, compared with 35.5 times at Thursday’s close and a five-year average of 21.2 times.
- The $90 target is plausible but stretched. Revenue growth supports the bullish case, but Neutron’s execution remains critical.
Rocket Lab (RKLB) shares have fallen sharply from their May highs, but TD Cowen still sees significant upside.
On October 9, analyst Gautam Khanna lowered his price target from $120 to $90 while maintaining a Buy rating.
That implies approximately 32% upside from Rocket Lab’s $68.44 intraday price on October 9.
The question is whether the company’s growth can justify that valuation.
Why Has Rocket Lab Stock Fallen?
Rocket Lab closed October 8 at $68.40, approximately 54.5% below its May 27 closing high of $150.23.
Part of the decline reflects a valuation reset. At its May peak, Rocket Lab traded at 89.2 times forward sales, according to TIKR data.
Yet its underlying business continues expanding.
According to its second-quarter earnings release, revenue jumped 62% year over year to a record $234 million, while backlog reached $2.36 billion.
However, cash consumption remains a concern.
Rocket Lab reported a $110.1 million non-GAAP free cash flow outflow during the quarter while developing its Neutron rocket.
Management targets Neutron’s delivery to the launch pad in the fourth quarter, although its inaugural launch timing remains uncertain.
Rocket Lab also completed a $1.94 billion at-the-market stock offering to help finance its planned acquisition of Iridium Communications (IRDM).
Meanwhile, SpaceX (SPCX) is acquiring additional wireless spectrum to expand Starlink’s connectivity services, potentially increasing competition for Iridium, which Rocket Lab plans to acquire.
As TIKR previously reported, Rocket Lab shares declined nearly 9% across October 7 and 8.
Why Analysts Still See Upside
Despite lowering its target, TD Cowen maintained its Buy rating amid a broader aerospace and defense valuation reset.
Wall Street remains optimistic.
TIKR data shows Rocket Lab’s consensus price target rising from approximately $50 a year earlier to $107, below its July peak of $117.
Analyst targets range from $64 to $150, with 17 of 21 analysts rating the stock Buy or Outperform as of October 8.
Can Rocket Lab Justify a $90 Valuation?
Rocket Lab’s earnings outlook highlights both its growth potential and uncertainty.
TIKR’s normalized earnings estimates project EPS of $0.05 in 2027 and $0.41 in 2028, although only five analysts contribute to the latter estimate.
On a GAAP basis, the October 9 snapshot of Yahoo Finance’s analyst estimates projected a $0.07 loss per share in 2027, compared with a $0.04 loss expected three months earlier.
With profitability still developing, investors primarily value Rocket Lab based on anticipated sales growth.
Shares traded at 35.5 times forward sales on October 8, compared with their five-year average of 21.2 times.
TD Cowen’s $90 target implies approximately 46.7 times forward sales, assuming unchanged sales expectations.
That requires a substantially higher valuation multiple.
Is Rocket Lab Stock Worth $90?
TD Cowen’s $90 target is plausible, but the valuation looks stretched without further operational progress.
Rocket Lab’s revenue growth and expanding backlog support the bullish case. However, continued cash burn, earnings uncertainty, and Neutron’s development timeline remain significant risks.
Investors should watch third-quarter results against the company’s $250 million to $265 million revenue guidance, alongside Neutron’s progress toward its year-end pad-delivery target.
For now, $90 represents a credible bullish scenario rather than an obvious bargain.
Rocket Lab must demonstrate that its growth justifies investors paying substantially more for each dollar of expected sales.
So What Is Rocket Lab Stock Actually Worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Rocket Lab could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
