Shareholders in Rocket Lab USA, Inc. (NASDAQ:RKLB) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts have sharply increased their revenue numbers, with a view that Rocket Lab USA will make substantially more sales than they'd previously expected. Investors have been pretty optimistic on Rocket Lab USA too, with the stock up 33% to US$7.10 over the past week. Could this upgrade be enough to drive the stock even higher?
Following the upgrade, the latest consensus from Rocket Lab USA's eight analysts is for revenues of US$225m in 2022, which would reflect a major 74% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$203m in 2022. It looks like there's been a clear increase in optimism around Rocket Lab USA, given the nice increase in revenue forecasts.
We'd point out that there was no major changes to their price target of US$13.63, suggesting the latest estimates were not enough to shift their view on the value of the business. 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. There are some variant perceptions on Rocket Lab USA, with the most bullish analyst valuing it at US$20.00 and the most bearish at US$6.50 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Rocket Lab USA's rate of growth is expected to accelerate meaningfully, with the forecast 204% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 131% over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 7.4% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Rocket Lab USA to grow faster than the wider industry.
The Bottom Line
The highlight for us was that analysts increased their revenue forecasts for Rocket Lab USA this year. The analysts also expect revenues to grow faster than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Rocket Lab USA.
Better yet, Rocket Lab USA is expected to break-even soon - within the next few years - according to analyst forecasts, which would be a momentous event for shareholders. For more information, you can click through to our free platform to learn more about these forecasts.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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