Today's fluctuations in Rocket Lab's share price: A surge followed by a descent.
Rocket Lab's (RKLB) stock is giving investors another thrilling ride this Monday morning. Initially surging over 7% in the initial minutes, the stock started losing momentum, dipping into the negative territory before 10 a.m., before bouncing back.
By 10:45 a.m. ET, Rocket Lab's stock had rebounded, climbing by 2%.
What triggered Rocket Lab's stock surge?
Monday's exhilarating ride can be attributed to two financial institutions, Morgan Stanley and Citigroup. Insider information reveals that Morgan Stanley analyst Kristine Liwag nearly doubled her predicted price for Rocket Lab stock, setting it at $18 per share. Similarly, Citigroup's Jason Gursky boosted his target from $13 to $22.
Both analysts expressed optimism about Rocket Lab's new Neutron medium-lift rocket attracting market share.
While Morgan Stanley's analyst warned that the stock might be unstable prior to Neutron's initial launch, keeping her recommendation as 'equal weight' (read: maintain your current position), Citigroup's analyst remained more bullish, reaffirming his 'buy' recommendation and suggesting that Neutron could potentially see even more popularity than Rocket Lab has suggested.
Is Rocket Lab stock worth investing in?
As Morgan Stanley pointed out, Rocket Lab stock's estimated value ranges from $10 to $25 per share, depending on whether Neutron successfully launches by next year.
Remember the adage, "space is tough"? Rocket Lab might need additional time to prepare Neutron for its launch (which was initially scheduled for 2024). However, having a robust history with the Electron rocket, Rocket Lab will likely launch Neutron in due course, and keep on launching. Looking ahead five years, analysts forecast this space stock generating over $500 million in free cash flow (FCF) in 2029, valuing it at approximately 18 times 2029 FCF.
To be honest, I'd hesitate to buy more stock at this price, even if Rocket Lab manages to launch Neutron successfully. Being a shareholder already, my stance might be influenced.
The financial boost from Morgan Stanley and Citigroup, with analysts Kristine Liwag and Jason Gursky raising their predicted prices for Rocket Lab stock to $18 and $22 respectively, has encouraged investors to consider further investments in Rocket Lab. The optimism stemming from the anticipated success of Rocket Lab's new Neutron medium-lift rocket, which is expected to attract market share, has sparked renewed interest in finance and investing in Rocket Lab.
