Rocket Lab's (RKLB) long-term drivers, including the clearer path to the commercialization of its Neutron rocket, outweigh the near-term pressures of Q3 margin noise, Morgan Stanley said in a note Wednesday.
The company reported a Q3 loss late Monday of $0.12 per diluted share on revenue of $267.8 million. Analysts polled by FactSet expected a loss of $0.07 on revenue of $257.2 million.
Rocket Lab's Neutron pricing of $70 million is a "big positive" compared with Morgan Stanley's estimates of $50 million to $55 million, according to the note. The company secured eight missions in Q3 worth roughly $515 million, or around $64 million on average.
"Customers' willingness to commit at higher prices ahead of the inaugural flight signals strong confidence in the vehicle and supports the long-term earnings power of the program," Morgan Stanley analysts said.
The financial payoff is expected in 2029 to 2030 as cadence increases and the missions achieve revenue, the analysts said. They raised their 2030 estimate on average selling price to around $66 million based on the upside of future missions.
Morgan Stanley maintained the company's stock rating at overweight and adjusted the price target to $103 from $105 based on dilution due to the acquisition of Iridium Communications (IRDM).
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