Rocket Lab stock boosted by Outperform rating

Shares of Rocket Lab are surging after an analyst from Cowen gave the stock an Outperform rating.

Video transcript

RACHELLE AKUFFO: Now my pick is Rocket Lab USA, which designs and manufactures small and medium class rockets, satellites, and spacecraft components. Now it got a boost today, thanks to an upgrade from Cowen analyst Cai von Rumohr to a buy and setting an $8 price target. Shares currently up almost 7%, though off their intraday highs. Now, in that note, he cited, quote, "key execution milestones" and improved competitive position and benefits from Russian sanctions for that upgrade, and said it really is well positioned to become a strong number two launch provider after Elon Musk's SpaceX.

Now, like SpaceX, it uses reusable rockets, but Rocket Labs are smaller and designed for smaller payloads, also less expensive to scale. But it's still very early in its evolution and still doesn't have positive cash flow yet. That's not expected until early 2024. And Rocket Lab has lost more than half its value since going public via SPAC in August of 2021. So this is a longer play to watch. But obviously, when someone starts putting your name in there with SpaceX, it's definitely one to keep an eye on, Seana.

SEANA SMITH: It certainly is, Rachelle. I think a lot of this has to do with the fact that it's strictly a valuation play. Cowen mentioning that here in this note, just in terms of how far the stock has fallen, their projections here that it could potentially recoup some of those losses. A 55% jump from where the stock closed yesterday. That's Cowen's new price target.

Track record here for the company, it's had six successful launches, expected to have its first US launch in the fourth quarter here of this year. So certainly, I think at least, the short-term stock reaction could hinge on the success of that launch here in the US.