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Citi resumed coverage on Rocket Lab (NASDAQ:RKLB) on Monday with a Buy rating. The firm highlighted recent capital markets transactions and a major contract won by the U.S. government for the Long Beach-based company.
Analyst Jason Gursky noted the the company is now likely to have sufficient liquidity to execute its current order book, develop new products and engage in mergers and acquisitions. View the new U.S. government contract as proof positive that customer adoption of the company’s products is starting to accelerate.” Our $6 price target is derived using a recent transaction multiple by 3.6x compared to our 2026 revenue estimate.
In particular, Citi highlighted improved liquidity for RLKB after the company recently raised approximately $300 million in net proceeds through a conversion and subsequent covered call transaction. The funds are expected to be used to reduce another $40 million in debt and for general corporate purposes, including product development, CapEx and mergers and acquisitions. Of note, Citi expects RLKB’s M&A activity to accelerate with the recent capital inflow as the company further integrates vertically to improve the company’s competitive positioning.
“We estimate this brings 3Q23 pro forma liquidity to over $600 million, a level we believe is sufficient for the company to execute on its strategy and become self-funded over time… A recent award of $515 million from part of Space Development The agency represents a strong endorsement of the company’s products and technical expertise and follows a commercial award under a GlobalStar program. In our view, these two programs together suggest that adoption by of the company’s satellite product customers is accelerating, and the recent improvement in liquidity is likely to allow for smoother execution of this backlog as the company expands capacity and working capital.”
Citi assigned RKLB a $6 price target, achieved by taking a multiple of 3.6X over the company’s 2026 revenue estimate for RKLB.
Rocket Lab (RKLB) shares jumped 8.87% in morning trading Monday to $4.70 from a 52-week range of $3.62 to $8.05.