Earnings Update: Here's Why Analysts Just Lifted Their Rocket Lab USA, Inc. (NASDAQ:RKLB) Price Target To US$14.36
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Rocket Lab USA, Inc. (NASDAQ:RKLB) investors will be delighted, with the company turning in some strong numbers with its latest results. It looks like a positive result overall, with revenues of US$105m beating forecasts by 2.4%. Statutory losses of US$0.10 per share were 2.4% smaller than the analysts expected, likely helped along by the higher revenues. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Check out our latest analysis for Rocket Lab USA
After the latest results, the twelve analysts covering Rocket Lab USA are now predicting revenues of US$594.2m in 2025. If met, this would reflect a substantial 63% improvement in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 34% to US$0.25. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$596.5m and losses of US$0.24 per share in 2025. Overall it looks as though the analysts were a bit mixed on the latest consensus updates. Although revenue forecasts held steady, the consensus also made a pronounced increase to its losses per share forecasts.
Despite expectations of heavier losses next year,the analysts have lifted their price target 84% to US$14.36, perhaps implying these losses are not expected to be recurring over the long term. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Rocket Lab USA at US$25.00 per share, while the most bearish prices it at US$5.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The period to the end of 2025 brings more of the same, according to the analysts, with revenue forecast to display 48% growth on an annualised basis. That is in line with its 46% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 4.4% annually. So although Rocket Lab USA is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.