Information disclosed by Rocket Lab (RKLB) on its second-quarter earnings call indicates that the company is making major strides towards launching its larger, potentially lucrative, new rocket, known as Neutron.
Further, RKLB suggested that it’s well-positioned to benefit meaningfully from the White House’s huge missile-defense initiative and its efforts to prepare for forays onto Mars.
Also bullish for RKLB stock is the interest that it’s receiving from entities outside of the U.S., while the shares have held their own in recent weeks, despite the fact that many other names in the defense and aerospace sectors have weakened considerably during this period.
Meaningful Progress on the Neutron Front
As I noted in a previous column, Neutron is, “Capable of carrying significantly larger cargoes to low-Earth orbit than the Electron (RKLB’s current main rocket and ) is expected to propel RKLB into profitability in 2027.” And boding well for RKLB’s outlook, the Neutron could participate in the Pentagon’s National Security Space Launch Lane 1 program which has a huge budget of $5.6 billion over five years.
Given these points, the significant headway that the company made on the Neutron is certainly a positive indicator for Rocket Lab and RKLB stock.
Specifically, CEO Peter Beck, speaking on the Q2 call held on August 8, noted that the “launch and test sites (for the rocket)are substantially complete, (and) recovery infrastructure is on track. What’s more, the company can produce an engine for the Neutron “every 11 days,” while many other technical elements are proceeding according to plan, Beck reported. And from a regulatory perspective, the CEO indicated that the Neutron is on track to meet the company’s goal of carrying out a test flight by December 2025.
Poised to Get Boosts From Missile Defense and a Mars Mission
Beck had previously said that RKLB was poised to benefit from Golden Dome, the Trump administration’s missile-defense plan which is supposed to wind up costing $175 billion. But during the Q2 call, Beck detailed the components of Golden Dome that RKLB will likely be able to provide, citing space based missile warning sensors and its hypersonic testing system. According to Beck, the latter product can be used to test the missile defense system. Additionally, RKLB will be able to provide payloads for the Golden Dome, while Electron and Neutron can also play roles in the initiative, Beck stated. He indicated that RKLB can manufacture its products much more quickly than the largest defense firms, enabling it to meet the administration’s aggressive deadlines for the project and giving it a major advantage over its huge competitors when it comes to competing for Golden Dome’s funds.
When it comes to the Mars human mission, Rocket Lab can provide components of a telecom orbiter, which would enable communications on the planet, Beck indicated. And RKLB has already deployed the Ingenuity helicopter for previous Mars missions that did not include humans, said the CEO, suggesting that its Escapade spacecraft would be used for the human missions.
Overseas Progress and the Resilience of RKLB Stock
In Q2, Rocket Lab made a deal to launch two satellites for the European Space Agency in 2025. That agreement could lead to a significant number of other contracts with the agency, Beck noted. Moreover, another country has agreed to use Electron for multiple missions, he said. As more nations begin to utilize a greater number of satellites, RKLB’s revenue from beyond the U.S. is likely to grow extensively.
And suggesting that the Street looks upon RKLB more favorably than on many of its peers, RKLB climbed 3% in the month that ended on August 26, while many other aerospace and defense stocks fell significantly during the same period. RKLB’s outperformance bodes well for the short-to-medium term outlook.
*This article is intended to be informational only; it is not financial advice.
