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Veteran analyst who forecast Rocket Lab's stock rally updates price target
There's fast, real fast, and then there's Mach 5.
Now, we're not talking about the super fast race car driven by Speed Racer in the 1960s Japanese anime that bears the hero's name.
Related: Veteran trader revamps Rocket Lab stock price target after earnings
No, we mean the actual speed, which is five times the speed of sound, or roughly 3,800 mph, fast enough to fly you from New York to L.A. in about 30 minutes and make Tom Cruise’s Maverick character in Top Gun look like he's standing still.
Hypersonics is all about the need for speed, and NASA is focusing on this area of study to enable point-to-point and space-access hypersonic vehicles.
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“In the long term, NASA envisions reusable hypersonic vehicles with efficient engines for routine flight across the globe,” the space agency said on its website . “This work supports potential emerging markets in high-speed flight."
NASA foresees developing a next-generation reusable hypersonic vehicle by 2050 that could serve as the first stage in a two-stage space access vehicle.
The first human-made object to reach hypersonic speeds was a U.S. WAC Corporal sounding rocket on Feb. 24, 1949, which reached speeds of over Mach 5 but burned up during re-entry into the atmosphere.
Air Force Major Robert White was the first pilot to fly a winged aircraft at speeds over Mach 4, 5, and 6 in the X-15 rocket-powered research craft in 1961.
Rocket Lab cites critical need for U.S. space innovation
Chinese scientists reportedly launched a bulky hypersonic aircraft during a 2021 test flight that has only recently been publicized, according to the South China Morning Post .
Officials said the aircraft features a fat, round fuselage, and cape-shaped wings, marking a significant departure from slender hypersonic vehicles.
Hypersonic technology is also being developed for weapons. German scientists designed the first hypersonic weapon in the 1930s, but it was never constructed.
Related: Analyst adjusts Rocket Lab's stock price target on space economy outlook
Russia reportedly fielded operational weapons and used them for combat in the 2022 invasion of Ukraine, and a volley of Russian hypersonic missiles was launched at Kyiv in January 2023.
Rocket Lab USA ( RKLB ) announced on Dec. 9 that it had successfully launched a suborbital mission in November to test hypersonic technology for the U.S. Defense Department.
“Leveraging commercial launch services allows our nation to affordably test components early and frequently, accelerating hypersonic development,” said George Rumford, director of the defense department’s Test Resource Management Center
Rocket Lab said the test “platform showcased a new suite of cutting-edge technologies optimized for hypersonic technology tests with vastly increased payloads.”
The company also designed, manufactured, assembled, and integrated the experimental hypersonic instrumentation, which was launched on this mission but on a highly accelerated timeline.
Rocket Labs said the mission provided hypersonic test launch capabilities under the Multi-Service Advanced Capability Hypersonics Test Bed (MACH-TB) project, which aims to increase hypersonic flight testing for the United States in support of technology maturation.
“Hypersonic technology testing is a critical need for the nation and one that we’re proud to be serving with our test launches,” Brian Rogers, the Long Beach, Calif.-based company’s vice president of global launch services.
Rocket Lab, founded in 2006 by Peter Beck of New Zealand, has been launching missions to space for commercial and government customers since 2017. More than 200 payloads have been deployed from its U.S. and New Zealand launch sites.
Wall Street veteran bends the rules on Rocket Lab stock
Veteran trader and TheStreet Pro contributor Stephen Guilfoyle, also known as Sarge, has followed Rocket Lab's trajectory. The recent announcement has prompted him to bend the rules a little bit .
The company’s stock has zoomed nearly 338% year-to-date, and shares are up a stunning 426% from a year ago.
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Guilfoyle said hypersonic weapons are considered immune to modern defenses, adding, "Unfortunately, the U.S. military is still considered to be behind both the Chinese and Russian militaries as far as developing reliable hypersonic delivery is concerned."
"Additionally, two weeks ago, the Biden Administration awarded a grant of $23.9 million to RocketLab USA under the CHIPs Act to create a more robust and resilient supply of space grade solar cells that would be used to power both spacecraft and satellites," said Guilfoyle, whose career dates back to the floor of the New York Stock Exchange in the 1980s.
The stock spiked in late November into early December, reaching an apex at $28.10 after beating Wall Street’s third-quarter expectations.
Since that top, the stock has fallen out of bed a bit, closing at $23.24 on Dec. 9, off 5.83% for the day and down 17.3% from that top tick a little more than a week ago, Guilfoyle said, adding that "the balance sheet is in very good shape."
"You know I hate violating my net basis, but with this one, I see no choice if I want to grow the position," he told investors, referring to the calculated value of an investment after subtracting any relevant deductions or liabilities.
"Our net basis stands at $5.05, which even after the drawdown puts us up almost 350%," Guilfoyle said. "My Target price? Currently $33, and that's predicated on a new high being created that launches an algorithmic response."
"More than likely, the time is here to manage this position," he said.
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