Why Rocket Lab Stock Keeps Going Up

Rocket Lab (NASDAQ: RKLB) stock soared by another 16% through 11:13 a.m. ET Friday, putting it on course to close out this week with a 37% total gain.

The company manufactures (relatively) small rockets that it uses to launch small satellites into orbit, but what launched its share price upward earlier this week isn't 100% clear. However, credit for Friday's gain in particular surely goes to KeyBanc, which just announced it's raising its price target on the space stock to $11 a share.

What KeyBanc says about Rocket Lab

KeyBanc didn't quantify why it thinks Rocket Lab is worth exactly $11 a share. In Friday's note, covered on StreetInsider.com, analyst Michael Leshock simply said he "came away with increased visibility/ confidence in RKLB's ability to scale its business" after meeting with company management, and believes Rocket Lab will be "an industry leader in both launch services and satellite manufacturing/design."

If this story progresses as the analyst expects it to, he thinks the stock could hit $11 within a year.

Is Rocket Lab stock a buy?

Yet thanks to this week's run-up, Rocket Lab already trades at more than $10 a share. Even if Leshock is right, that would mean there's less than a 10% gain to be had from the stock over the next 12 months, which isn't a lot for a growth stock. That magnitude of near-term upside doesn't present a particularly great reason to buy Rocket Lab at its current price.

My hunch is that a lot of the easy money on Rocket Lab has already been made, and the stock will probably be dead money for a while. I'm even more inclined to believe that because its prospects for reaching profitability soon appear to have dimmed.

As recently as April, most analysts covering the company were hoping the arrival of its new, larger, and more capable Neutron rocket would help turn Rocket Lab profitable by 2026. However, management has since announced that the Neutron won't be introduced until 2025. According to S&P Global Market Intelligence, the consensus view among analysts now is that it won't earn its first profit until 2027.

Further from profitability, but a higher stock price? That doesn't make a lot of sense to me.

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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.