Why Rocket Lab Stock Skyrocketed 33.5% Last Month and Has Kept Surging in July

Key Points

• A combination of bullish catalysts helped Rocket Lab stock reach a new record high in June.

• Rocket Lab landed a new deal with the European Space Agency and successfully completed two new rocket launches.

• Rocket Lab stock has risen even higher in July's trading thanks to analyst coverage and excitement about its tech.

• 10 stocks we like better than Rocket Lab ›

Aided by bullish momentum for the broader market, Rocket Lab (NASDAQ: RKLB) stock posted big gains in June's trading. The company's share price rocketed 33.5% higher in the month, according to data from S&P Global Market Intelligence. Meanwhile, the S&P 500 climbed 5%, and the Nasdaq Composite rose 6.6%.

Comments from a Federal Reserve official last month pointed to an increased likelihood that the central banking authority will deliver a cut for the benchmark interest rate this month, and the development paved the way for the stock market to see big gains. In addition to the bullish backdrop for the market at large, Rocket Lab stock saw big gains in conjunction with business-specific news and positive coverage from analysts.

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Image source: Getty Images.

Rocket Lab soars on analyst coverage, contract news, and launches

On June 10, Cantor Fitzgerald published new coverage on Rocket Lab. Andres Sheppard, the firm's lead analyst on the stock, reiterated an overweight rating and raised his one-year price target from $29 per share to $35 per share. Sheppard pointed to Rocket Lab's successful launch history, different rocket types, and launch sites as strong competitive advantages. He also noted that Rocket Lab could benefit from the worsening relationship between President Trump and SpaceX CEO Elon Musk.

Late in the month, Rocket Lab announced that it had landed a contract with the European Space Agency (ESA) to launch two satellites. The news prompted a substantial rally for the stock, and shares moved even higher after the company announced the launches of its 67th and 68th Electron rockets. The two launches occurred at the same launch site within 48 hours, marking the company's fastest-ever turnaround time for a launch. The news pushed Rocket Lab stock to a new record high, and it's kept climbing from there.

Why has Rocket Lab stock kept surging in July?

Rocket Lab stock has continued on its upward trajectory this month. As of this writing, the company's share price is up 8.2% across July's trading. In addition to continued excitement surrounding its opportunities in the space industry, the stock has gotten a lift from bullish analyst coverage.

In a note published July 2, KeyBanc maintained an overweight rating on Rocket Lab and raised its price target on the stock from $29 per share to $40 per share. As of this writing, KeyBanc's latest price target implies additional upside of roughly 3%.

Rocket Lab now has a valuation of roughly $17.9 billion and is trading at approximately 31 times this year's expected sales. While the recent rally for the stock may raise questions about whether the company's valuation has become unreasonably stretched, the business looks poised to grow at a rapid clip in the near term and seemingly has huge expansion opportunities over the long haul.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Rocket Lab. The Motley Fool has a disclosure policy.