Rocket Lab Price Target After Earnings Impress

On Thursday afternoon, $10K Portfolio holding and longtime Sarge fave Rocket Lab (RKLB) released the firm's fiscal first quarter financial results. For the period ended March 31, Rocket Lab posted a GAAP EPS of -$0.07 on revenue of $200.348 million. These top- and bottom-line results both beat Wall Street's expectations while the sales print was good enough for year-over-year growth of 63.5%.

In the press release, the firm made the claim:

"We exited the quarter with $2.2 billion in backlog and currently have access to more than $2 billion in liquidity, putting us in a very strong position for continued growth and M&A execution."

The statement then went into some detail:

“Rocket Lab continues to lead on execution and growth. We completed successful orbital launches and hypersonic test missions, introduced new space systems products including the highly sought after Gauss satellite electric propulsion system, have been selected to support the Department of War’s Space Based Interceptor program under Golden Dome for America in partnership with Raytheon, and expanded our leading role in hypersonic test launch with a record contract under the MACH-TB program."

On expansion, Rocket Lab informed:

"We also closed the Mynaric acquisition to establish our first European footprint with Rocket Lab Europe, and entered into a definitive agreement to acquire Motiv, adding Mars-proven robotics heritage to our suite of capabilities, while also insourcing costly and supply-constrained spacecraft components, including solar array drive assemblies and other precision mechanisms and motion control systems."

Operations

As revenue generation grew 63.5% to $200.348 million, the cost of that revenue increased 41.8% to $123.8551 million. This left a gross profit of $76.493 million (+117%) on a gross margin of 38.2% up from 28.8%. Total operating expenses grew 40.3% to $132.462 million, leaving GAAP operating income/loss of -$55.969 million (up from -$59.188 million).

After accounting for interest, other income and expenses and taxes, GAAP net income loss attributable to shareholders improved to -$45.022 million from -$60.616 million. This works out to a GAAP EPS of -$0.07 per fully diluted share, up from -$0.12 for the year-ago comparison.

Guidance

For the current quarter, Rocket Lab sees revenue of $225 million to $240 million, which takes the low end of the range well above the $205 million or so that Wall Street had in mind. The firm also sees GAAP gross margin of 33% to 35% and an adjusted EBITDA of -$26 million to -$20 million. This guidance is being viewed as strong by Wall Street.

Fundamentals

For the period reported, Rocket Lab generated an operating cash flow of -$50.332 million. On top of that came capex spending of $27.065 million, leaving free cash flow of -$77.397 million. The firm is obviously not yet in a position to return capital to shareholders.

Turning to the balance sheet, the firm ended the quarter with a cash position of $1.383 billion, inventories of $183.146 million and current assets of $1.8 billion. Current liabilities add up to $402.345 million. This firm has no short-term debt on the books. This places the firm's current ratio at a muscular 4.48 and its quick ratio at a just as impressive 4.02.

Total assets amount to $2.82 billion. Goodwill and other intangibles comprise $429.305 million or 15.2% of that total, which is better than the modern norm. Total liabilities less equity comes to $555.574 million. This includes just $38.585 million in longer-term debt and convertible senior notes. This is a pristine balance sheet.

Opinion

Rocket Lab continues to impress. This was a good quarter. The guidance is solid. The balance sheet is in excellent shape. The firm continues to grow. Rocket Lab announced separately on Thursday night that the firm had signed a definitive agreement to acquire California-based Motiv Space Systems. Motiv specializes in space robotics, motion control systems and spacecraft precision mechanisms. Financial terms of the deal were not disclosed. The acquisition is expected to close in the second quarter of 2026.

On top of that news, Rocket Lab also announced the award of a $30 million contract from defense contractor Anduril Industries for three hypersonic test launches using its HASTE vehicle. These hypersonic test launches will take place from Rocket Lab’s Launch Complex 2 in Virginia. The first mission is scheduled within 12 months.

RKLB is trading sharply higher on Friday morning. Readers will note that the stock came out of a falling wedge of bullish reversal in mid-April. Since breaking out, the shares have found support at their 21-day EMA. The current pivot is the April 22 high of $93. Relative strength has been neutral for about two weeks now, as the daily MACD had turned negative. I would expect to see a much more bullish looking MACD by Monday morning. My current target price for RKLB is $112.

Upcoming Portfolio Earnings

- Evolv Technologies (EVLV) after the closing bell on Tuesday, May 12

- Velo3D (VELO) after the closing bell on Thursday, May 12

- Ondas Inc (ONDS) ahead of the opening bell on Thursday, May 14

- Sidus Space (SIDU) ahead of the opening bell on Thursday, May 14

Thursday's Intention vs Thursday's Actual Trade

-Intention: Buy 100 shares of (SNAP) at $5.75 (limited) or better.

-Actual trade: Nothing Done, SNAP never traded at $5.75 or lower after publication on Thursday.

Friday's Intention

Buy 100 shares of SNAP at $5.75 or better. The portfolio is still willing to make this trade should the opportunity present. I see SNAP trading at $5.90 at the moment.

Current Positions

Long 50 shares of (EVLV) at $6.0898. Last sale: $7.19.

Long 25 shares of (MBLY) at $8.92. Last sale: $8.91.

Long 150 shares of (OCUL) at $8.305. Last sale: $9.75.

Short one OCUL $11 Sep 18 call at $1.65, Last sale: $1.55.

Long 125 shares of ONDS at $9.4749. Last sale: $9.02.

Short one ONDS $13 June 19 call at $0.84. Last sale: $0.23.

Long 10 shares of (PL) at $37.18. Last sale: $36.25.

Long 12 shares of (PLTR) at $140.30. Last sale: $136.38.

Long 10 shares of RKLB at $65.173. Last sale: $84.99.

Long 125 shares of (SIDU) at $2.725. Last sale: $3.01.

Long 100 shares of SNAP at $5.9034. Last sale: $5.90.

Short one SNAP $7 June 19 call at $0.45, Last sale: $0.20.

Long 175 shares of (SOFI) at $15.9573. Last sale: $16.11.

Short one SOFI August 21 $20 call at $1.02. Last sale: $0.88.

Long 60 shares of VELO at $11.7427. Last sale: $12.37.

Cash: $506.41

Portfolio Value: $10,760.76, +7.6% from inception on March 24.

At the time of publication, Guilfoyle was long EVLV, MBLY, OCUL, ONDS, PL, PLTR, RKLB, SIDU, SNAP, SOFI, VELO.