Why Rocket Lab Stock Keeps Going Up

The rocket lab (RKLB 16.85%) the stock was up another 16% by 11:13 a.m. ET Friday, putting it on track to close the week with a total gain of 37%.

The company makes (relatively) small rockets that it uses to launch small satellites into orbit, but what sent its stock price soaring earlier this week isn’t 100% clear. However, credit for Friday’s win in particular certainly goes KeyBankwhich just announced it is raising its price target on the space stock to $11 per share.

What KeyBanc says about Rocket Lab

KeyBanc did not quantify why it believes Rocket Lab is worth exactly $11 per share. In a Friday note reported to StreetInsider.com, analyst Michael Leshock simply said he “came away with increased visibility/confidence in RKLB’s ability to scale its business” after meeting with the company’s management and believes Rocket Lab will be “an industry leader in both launch services and satellite manufacturing/design”.

If this story progresses as the analyst expects, he thinks the stock could hit $11 within a year.

Is Rocket Lab stock a buy?

However, thanks to this week’s advance, Rocket Lab is already trading above $10 per share. Even if Leshock is right, that would mean there’s less than a 10% gain in the stock over the next 12 months, which isn’t much for a growth stock. That magnitude of near-term growth doesn’t present a particularly strong reason to buy Rocket Lab at its current price.

My guess is that a lot of the easy money on Rocket Lab has already been earned, and the stock will likely be dead money for a while. I’m even more inclined to think so because its prospects of reaching profitability anytime soon seem to have dimmed.

In April, most analysts covering the company hoped that the arrival of its new, larger and more capable Neutron rocket would help Rocket Lab be profitable by 2026. However, management has since announced that the Neutron will not be introduced until 2025. According to S&P Global Market Intelligence, the consensus view among analysts is that it won’t turn a profit until 2027.

Further to profitability, but a higher share price? Doesn’t really make sense to me.