Rocket Lab (NASDAQ: RKLB) shares have dropped sharply from their May peak, yet TD Cowen analyst Gautam Khanna continues to see meaningful upside ahead.
Khanna lowered his price target from $120 to $90 on October 9, while holding firm on his Buy rating for the commercial space company.
The revised target implies approximately 32% upside from Rocket Lab’s $68.44 intraday share price on the day the adjustment was made.
Rocket Lab closed October 8 at $68.40, representing a decline of roughly 54.5% from its May 27 closing high of $150.23.
The steep pullback from May’s highs reflects a broader valuation reset, as the stock had traded at 89.2 times forward sales at its peak, according to TIKR data.
Despite the share price decline, the company’s underlying business has continued to expand at a rapid pace.
Second-quarter revenue jumped 62% year over year to a record $234 million, while the company’s backlog reached $2.36 billion.
Cash consumption, however, remains a significant concern, with Rocket Lab reporting a $110.1 million non-GAAP free cash flow outflow during the quarter as it funds development of its Neutron rocket.
Management is targeting Neutron’s delivery to the launch pad in the fourth quarter, though the timing of its inaugural launch remains uncertain.
Rocket Lab also completed a $1.94 billion at-the-market stock offering to help finance its planned acquisition of Iridium Communications (IRDM), adding further complexity to the investment case.
SpaceX is acquiring additional wireless spectrum to expand Starlink’s connectivity services, a move that could intensify competition for Iridium ahead of the planned deal closing.
Rocket Lab shares declined nearly 9% across October 7 and 8, reflecting investor concern about the Neutron timeline, ongoing cash burn, and competitive pressure from SpaceX.
Wall Street has nonetheless remained broadly constructive, with TIKR data showing the consensus price target rising from approximately $50 a year earlier to $107, below a July peak of $117.
Of 21 analysts covering the stock as of October 8, 17 rated it Buy or Outperform, with individual targets ranging from $64 to $150.
TD Cowen’s $90 target implies approximately 46.7 times forward sales, compared with the stock’s 35.5 times multiple at Thursday’s close and a five-year average of 21.2 times.
That elevated multiple demands continued execution, particularly on Neutron development and quarterly revenue growth against management’s $250 million to $265 million third-quarter guidance range.
On an earnings basis, TIKR’s normalized estimates project earnings per share of $0.05 in 2027 and $0.41 in 2028, though the latter figure is based on only five analyst contributions.
On a GAAP basis, Yahoo Finance analyst estimates projected a $0.07 loss per share in 2027 as of October 9, compared with a $0.04 loss expected just three months earlier.
With profitability still developing, investors are primarily valuing Rocket Lab on anticipated sales growth, making Neutron’s commercial success a central factor in whether the $90 target is achievable.
TD Cowen’s revised price objective represents a credible bullish scenario, but the stretched valuation multiple means Rocket Lab must continue demonstrating that its growth justifies paying substantially more for each dollar of expected sales.
