These rocket stocks sold off on the SpaceX IPO. KeyBanc says it’s time to buy the dip
SpaceX ‘s blockbuster initial public offering should boost a pair of aerospace technology stocks amid a broader acceleration in the space sector, according to KeyBanc Capital Markets. The bank upgraded Firefly Aerospace and Rocket Lab to overweight from sector weight. KeyBanc put a price target of $50 on Firefly, implying 57% upside from Friday’s close, and gave a $135 target on shares of Rocket Lab, suggesting a 32% increase from its last closing price. “Post SPCX IPO-related volatility, we see compelling opportunities across the rapidly growing space sector,” KeyBanc analyst Michael Leshock wrote Sunday in a report to clients. “Given supportive macro, budgets, and increasing institutional interest, we favor well-capitalized commercial space companies with idiosyncratic growth vectors aligned with national security and NASA priorities and enablers of the broader space ecosystem.” Shares of SpaceX began trading Friday on Nasdaq, jumping 19% and valuing the the Elon Musk-controlled rocket maker at $2.1 trillion. It was the largest initial public offering in history. Yet the iShares U.S. Aerospace & Defense ETF edged lower by about 1% the same day, with several aerospace stocks falling sharply. Rocket Lab, for example, slid nearly 11%, while shares of Firefly tumbled 19%. But both are likely to bounce back amid rising institutional interest in aerospace businesses and their stocks – underscored by SpaceX’s IPO, according to KeyBanc. “NASA activity is accelerating at a pace not seen since the Apollo era, while launch supply remains structurally constrained … amid exponential growth in satellites and space-based applications,” Leshock wrote. KeyBanc’s call matches the consensus on Wall Street. Of the 10 analysts covering Firefly, eight carry a buy or strong buy on the stock, while 17 of 22 that cover Rocket Lab similarly rate it a buy or strong buy. Firefly has fallen 21% in the past month but is ahead 57% in the past six after going public last August, while Rocket Lab is off 18% over the past month while rallying 85% in the past half year. Rocket Lab came public in late 2020.
