Rocket Lab USA stock (NASDAQ: RKLB) broke through to fresh all-time highs in pre-market trading, climbing 2.71% to $93.22 following an upgrade from Wall Street. Morgan Stanley raised its rating on the space technology company to Overweight from Equal Weight whilst hiking its price target to $105 from $67.
The upgrade marks a significant reversal in sentiment from the investment bank, which had maintained a more cautious stance on the stock through much of late 2025. Shifting sentiment in the analyst community is not easy, with markets responding in turn.
The stock had already demonstrated considerable momentum heading into the upgrade, hitting a new high of $92.46 during yesterday's session before closing at $90.76, down 1.13% on the day.
Morgan Stanley's analyst introduced an “Attractive industry view” on space technology heading into 2026, pointing to multiple tailwinds including higher launch cadences, new product introductions, policy support, and market maturation. The firm characterized the favorable trends that drove 2025 outperformance as likely to persist through the current year, improving risk-reward profiles across the sector. Rocket Lab was singled out as a strategically important, multi-faceted space company with credible long-term growth optionality, with particular emphasis on the company's proven launch execution and its entry into the medium-lift market segment.
The upgrade arrives on the heels of a transformative $816 million contract award from the U.S. Space Development Agency announced in mid-January 2026. That deal significantly expanded Rocket Lab's backlog and underscored the company's evolution beyond traditional small satellite launch services into broader space infrastructure capabilities.
Analyst sentiment toward Rocket Lab has strengthened progressively over recent months, though not without volatility.
Stifel reaffirmed its Buy rating in late December 2025 while lifting its price target from $75 to $85, reflecting confidence in the growth trajectory.
KeyBanc had similarly maintained an Overweight rating in October 2025, raising its target from $50 to $75.
These bullish calls stand in contrast to Morgan Stanley's own actions in November 2025, when the bank trimmed its price target from $68 to $67 while maintaining Equal Weight, triggering a 2.5% decline in the stock.
The recent string of positive catalysts positions Rocket Lab as a primary beneficiary of increasing government and commercial demand for space access and infrastructure. Markets appear to be pricing in the company's expanding addressable market as it scales beyond its core Electron small-lift vehicle into medium-lift capabilities with its Neutron rocket program, while simultaneously growing its space systems division.
Bull Case:
- Morgan Stanley upgraded the stock to Overweight and raised the price target to $105, citing an “Attractive industry view” for 2026.
- The company secured a transformative $816 million contract from the U.S. Space Development Agency, significantly boosting its backlog.
- Rocket Lab is strategically positioned as a diversified space company with proven launch execution and expansion into the medium-lift market.
- Strong positive sentiment from other analysts, including Buy ratings and price target increases from Stifel and KeyBanc.
- The company is a key beneficiary of growing government and commercial demand for space infrastructure.
Bear Case:
- The stock exhibits significant volatility and sensitivity to analyst ratings, as shown by sharp drops following previous price target trims.
- Morgan Stanley previously held a more cautious “Equal Weight” rating, suggesting past uncertainty about the company's prospects.
- The stock closed down 1.13% in the session prior to the upgrade, indicating some underlying selling pressure.
- As a growth-focused company in the capital-intensive space sector, profitability metrics like P/E ratio are not yet applicable, which can be a risk.
With Morgan Stanley's $105 price target implying approximately 13% upside from current pre-market levels, the upgrade could attract fresh interest in the stock. The mix of favorable policy dynamics, contract wins, and improving analyst sentiment suggests the rally in Rocket Lab, already 268% higher over the past 12 months, may not end here.
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