Why Rocket Lab Stock Popped 5% Today

Small rocket maker Rocket Lab USA (NASDAQ: RKLB) stock ran up 5% through 2:30 p.m. ET Thursday after KeyBanc announced reservations about aerospace stocks in general -- but named Rocket Lab a notable exception.

According to reports, KeyBanc downgraded shares of ATI Inc. and Howmet Aerospace citing "slowing order rates and the onset of inventory accumulation," and expressed skepticism about the outlook for Boeing. In stark contrast, KeyBanc said it remains confident in certain space stocks, including Rocket Lab, for which the banker raised its price target to $12 per share.

What's up with Rocket Lab lately

Rocket Lab is doing its best to justify that confidence. Last week, the company announced it will add an unexpected (and apparently short-notice) launch "for a confidential commercial customer" who requested a launch less than two months ago. The company subsequently confided it would take "a few extra days to perform final checkouts" before launching the mission.

Launch update 🚀 we're taking a few extra days to perform final checkouts ahead our next mission. Updated launch date to come toward the end of next week. pic.twitter.com/YDgVzmGG3t

-- Rocket Lab (@RocketLab) October 18, 2024

Still, this mission still promises to be "Rocket Lab's fastest turnaround [from contract signing to rocket launching] to date," and will mark an unprecedented 12 launches in a single year for the company, beating 2023's record of 10 launches -- and 2024 isn't even over yet.

Is Rocket Lab stock a buy?

All this being said, investors need to be aware that launching rockets alone probably won't suffice to turn Rocket Lab profitable. Much of the company's 70% growth in revenue year to date actually come from Rocket Lab's already larger and more profitable space systems business, which builds rocket payloads (i.e., satellites) and spacecraft parts.

Rocket launches may be exciting, and growth in the launch rate is great for headlines, but Rocket Lab's real potential will be found in the less sexy sector of space systems manufacturing. If you're investing in this space stock, that's where you really want to see the growth happening.

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Rich Smith has positions in Rocket Lab USA. The Motley Fool recommends Rocket Lab USA. The Motley Fool has a disclosure policy.