What recent performance says about Rocket Lab

Rocket Lab (RKLB) has recently delivered a 2.3% one day gain, with the share price also showing a 24.6% move over the past week and a 22.0% change over the past month.

That recent surge in share price comes after an 11.6% year to date share price return and a very large 1 year total shareholder return of about 4x. This suggests momentum has strengthened again, despite a weaker 90 day share price return of an 11.9% decline.

If you are looking beyond Rocket Lab to see where else growth stories could be emerging, this is a good moment to scan 38 AI infrastructure stocks.

With the share price now only about 2% below the average analyst target and recent returns already very large over 1 year, you have to ask: is there still a buying opportunity here, or is the market already pricing in future growth?

Most Popular Narrative: 13.3% Undervalued

According to KiwiInvest, the most followed narrative puts Rocket Lab's fair value at $98 per share, above the recent close of $84.80, which frames the current rally in a different light.

Rocket Lab needs to start achieving positive net margins so it can transform from being a company that burns shareholder funds into one that earns enough cash to self-invest into its growth. Neutron's successful operation should be that turning point. However, Neutron's failure would risk the entire company.

Curious what sits behind that $98 number? The narrative leans on rapid revenue expansion, a step change in profitability, and a future earnings multiple more common in mature growth stories.

Result: Fair Value of $98 (UNDERVALUED)

However, this narrative also depends heavily on Neutron hitting its targets and on a shift from a US$198.2m net loss to sustained profitability.

Next Steps

The mix of optimism and concern in this story is hard to ignore. Take a moment to weigh both sides for yourself with 1 key reward and 3 important warning signs.

Looking for more investment ideas?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.