KeyBanc Capital Markets upgraded Rocket Lab and Firefly Aerospace to Overweight on Monday, following a selloff driven by SpaceX's record IPO last week. Analyst Michael Leshock called the decline unwarranted, noting strong fundamentals for both companies.
KeyBanc's Upgrades
Rocket Lab shares rose 4.3% to $106.84, while Firefly gained 4.3% to $33.25. Leshock set a $135 price target for Rocket Lab, calling it "the clear #2 to SPCX," and a $50 target for Firefly. The upgrades come after SpaceX's IPO pushed its valuation over $2 trillion, drawing investor attention away from other space stocks.
Financial Highlights
Rocket Lab reported Q1 revenue of $200.3 million, up 63.5% year-over-year, with a record backlog of $2.2 billion. The company secured 31 new Electron and HASTE contracts and five Neutron launches during the quarter. Firefly recently won a $75 million NASA subcontract for the MoonFall mission, using its Elytra craft to deliver drones to the lunar south pole by 2028.
Market Context
SpaceX shares continued to rise, up 8.3% at $174.35, after a 19% gain on its first trading day. The broader space sector saw a pullback last week as investors rotated into the newly public SpaceX. Leshock believes the selloff was overdone, emphasizing that the long-term growth story for commercial space remains intact. He noted that Rocket Lab's Neutron and Firefly's Eclipse could compete in the medium-lift market if SpaceX moves Starship more in-house.
The upgrades highlight a divergence in the space market, with established players like Rocket Lab and Firefly benefiting from strong order books and NASA contracts, while SpaceX's IPO creates short-term volatility. Analysts expect index inclusion and options flows to drive further interest in SpaceX, but Leshock sees value in the smaller players.
