Rocket Lab Stock Forecasted to Rise 40% According to Citigroup

Is Rocket Lab stock a buy?

No stock is perfect, and Citi noted some caveats to its buy recommendation. Rocket Lab missed sales expectations in this week's report. "Several" rockets that Rocket Lab was expecting to launch in 2024 may not actually launch until 2025, the analyst also warned in a note on TheFly.com. But long term, Citi sees Rocket Lab accelerating the pace of its rocket launches, growing its revenue, and on a course to earn profits and generate positive cash flow.

When will Rocket Lab turn profitable?

Precisely when Rocket Lab will turn profitable and free-cash-flow-positive remains to be seen. Most analysts think 2026 is the date for all these things to happen as Rocket Lab grows its Electron launch cadence and begins regular launches of its new Neutron medium-lift rocket. Forecasts have Rocket Lab earning close to $150 million that year, valuing the stock at about 13 times earnings two years out -- which doesn't seem an unreasonable valuation, given the speed at which sales are growing. I'd even go so far as to say that Citi's prediction of a 40% rise in stock price (implying a 19x multiple to 2026 earnings) isn't crazy-expensive.

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