Rocket Lab Stock Gets A Rare Downgrade—Here's Why

Core Viewpoint - Rocket Lab Corp. has been downgraded from Overweight to Sector Weight by KeyBanc Capital Markets due to the belief that the stock's recent surge has fully priced in major growth catalysts [1][2] Group 1: Stock Performance and Valuation - Rocket Lab's stock has surged 280% year over year, reaching above $92.00 in January [2] - Following the downgrade, Rocket Lab shares experienced a decline, trading 2.95% lower at $89.09 at the time of publication [3] Group 2: Key Developments and Contracts - In December, Rocket Lab secured an $816 million contract from the Space Development Agency for Tranche 3, nearly doubling its backlog [4] - The company successfully opened its LC-3 launch pad in Virginia and has ramped up production of the Archimedes engine, which is over 90% complete for qualification [4] Group 3: Market Influences and Future Outlook - Favorable policy changes, including a December 2025 executive order on American Space Superiority, have created a positive environment for commercial space companies [4] - Rumors of a $1.5 trillion SpaceX IPO have led to a sector-wide re-rating, benefiting Rocket Lab [4] - The stock currently trades at approximately 42x its estimated 2027 sales, significantly higher than the historical 20-30x price-to-sales range SpaceX maintained during its early growth stages [4] Group 4: Future Catalysts - KeyBanc's uncertainty remains around the Neutron rocket, with the debut launch pushed to Q1 or later [3] - Analysts are looking for a successful first launch of the Neutron rocket and additional large-scale contracts to regain confidence [5]