Rocket Lab Smashes Price Target: What's Next
Shares for this small-cap name have gone somewhat parabolic and I've got a plan of action.
You've reached your free article limit
You've read 0 of 1 free Pro articles.
Last week, I wrote to you concerning one of our favorite and most heavily -weighted names at "Stocks Under $10": Rocket Lab USA RKLB.
I increased my (our?) target price to $9.50 from $7.50 as the stock was, at that time, trying to break out from the upper trendline of an Andrews' pitchfork pattern. The shares have been hot this week, and now have apparently gone somewhat parabolic...
The only new news I have seen over that time came on Thursday — a rehashing of the story of Solaero, which is a subsidiary of Rocket Lab, having signed a non-binding preliminary memorandum of terms with the U.S. Department of Commerce to receive up to $23.9 million in direct funding on June 11, 2024. The investment would (did) enable the firm to increase its production of semiconductors for spacecraft and satellites as part of an expansion of its Albuquerque, New Mexico facility.
We see where the stock is trading now. The high of the day on June 11, 2024 was $4.60.
What Gives?
Five-star rated (by TipRanks) analyst Philip Gibbs of KeyBanc reiterated his "buy" rating on RKLB, while increasing his target price from $8 to $11. That's Friday's impetus, but this stock has been rolling.
Earnings are due on or around November 8, 2024. For the firm's third quarter, Wall Street is looking for a GAAP EPS of $-0.10, adjustable to $-0.08 on revenue of $102.4 million. A revenue print like that would be good for year-over-year growth of 51%. Revenue growth of more than 100% is expected for the fourth quarter.
My Thoughts
I will be staying long this name, and probably a lot of it, for quite some time. That said, as my target price has been breached in force, I will take something off of my position, as that is how my code of discipline rolls.
I do not yet have a new target price to go off of, so we'll act again should the stock somehow take out Gibbs' new target. Until then, we wait for a new technical pattern to develop in a way that we can identify a new pivot point.
Note to readers: RKLB was added to the benchmark SPADE Defense Index on September 20. This likely forced all defense and aerospace ETFs tracking that index to purchase the stock, which helped support the share price this week.
At the time of publication, Guilfoyle was long RKLB equity.
