Rocket Lab stock has fallen sharply in the second half of the year, erasing the gains it made in the first six months as investors waited for the SpaceX IPO. It dropped to $53, down 64% from its peak this year. That retreat will be tested later today when the company publishes its financial results.
Analysts expect strong Rocket Lab earnings
Rocket Lab, a top competitor to SpaceX, will publish its financial results later today, and analysts expect its numbers to be strong. Yahoo Finance data shows that the average estimate is that its revenue jumped by 65% in the third quarter to $257 million. This revenue growth is because demand for its services has continued growing this year.
Analysts predict that the company will guide to a fourth-quarter revenue of $265 million, which will bring its annual revenue to $959 million. Rocket Lab tends to beat analysts estimates, meaning that its annual revenue may cross the $1 billion milestone earlier than expected.
The most recent results showed that its revenue rose by 62% to $234 million, with its backlog soaring to a record high of $2.36 billion. This backlog has come from its programs like HASTE, E;ectron, and even Neutron.
For example, it was recently awarded a $397 million contract to deliver multiple flatellite spacecraft on Neutron by the Space Force. The company also received another $160 million contract to build three geostationary satellites.
Rocket Lab’s earnings come a few months after it announced a $8 billion deal to acquire Iridium, helping it to create a vertically integrated player that designs, builds, launches, and operates its own constellations. Eventually, the company will likely use this acquisition to build a competitor to Elon Musk’s Starlink.
Analysts have downgraded RKLB stock after its Neutron delay
These results come at a time when several analysts have downgraded their outlook for Rocket Lab because of the ongoing delay of its Neutron launch. It now expects to launch the service next year, instead of this quarter.
Citizens’ Trevor Walsh downgraded the target from $130 to $90, while KeyCorp’s Michael Leshock slashed it from $135 to $100. Bank of America also cut from $110 to $100.
On the other hand, some analysts have maintained their bullish outlook for the shares. Needham reiterated its buy rating and set a target at $120. Citigroup reiterated its market outperform rating, while Cantor sees the stock rising to $120.
Rocket Lab stock analysis
RKLB stock chart | Source: TradingView
The daily chart shows that RKLB has been in a downward trend this year, reaching a low of $44.30 last week. A closer look shows that it formed a head-and-shoulders pattern whose neckline was at $58.20. This pattern often leads to more downside.
Most importantly, the stock has already retested the neckline. Such a retest usually conforms a continuation. It has remained below the 50-day and 100-day moving averages. Therefore, the stock will likely drop to $44 after its earnings. Alternatively, it may rebound and retest the resistance at $60.
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