Why the Cassowary Vex hypersonic mission matters for Rocket Lab (RKLB)

Rocket Lab (RKLB) is preparing its Cassowary Vex mission, a dedicated hypersonic test flight on the HASTE rocket for the Department of War’s Defense Innovation Unit and Hypersonix, with liftoff targeted for late February.

This will be the company’s fourth hypersonic test mission in under six months. The launch will use HASTE to deploy Hypersonix’s DART AE aircraft from Launch Complex 2 in Virginia, and it underscores a growing role in hypersonic testing for U.S. and allied defense customers.

At a share price of $67.44, Rocket Lab has had a mixed recent run, with a 2.17% 1 day share price return, a 26.54% 30 day share price decline, but a very strong 1 year total shareholder return of 140.69% and a very large 3 year total shareholder return that reflects how much sentiment has shifted around its growth and risk profile.

If hypersonic testing is on your radar, it could be a good time to broaden your watchlist with our screener of 34 AI infrastructure stocks. This list focuses on companies building the backbone for next generation computing.

With the stock up 140.69% over the past year but down 26.54% in the last month, and trading at a 13.29% discount to one intrinsic value estimate, is there still upside here or is the market already pricing in future growth?

Most Popular Narrative: 31.1% Undervalued

Rocket Lab closed at $67.44, while the most followed narrative on the stock, according to KiwiInvest, points to a fair value close to $98 and builds a case around the long term space economy.

The global 'space economy' is forecasted to be worth ~$1.8 trillion by 2035. Roughly $800 billion is estimated to be made up of "backbone" business, such as satellites and rockets, and the services or software required to enable them, such as internet and positioning technologies. The remaining $1 trillion is estimated to be made up of businesses which operate on top of that backbone. For example, super-accurate position tracking enables faster package delivery or even autonomous drone delivery. Higher quality (and cheaper) satellite photography enables farmers to inspect their crops from satellite images and compare growth between paddocks from the office rather than travelling around the farm all day.

Curious how a launch and space systems business gets to that kind of valuation gap? The narrative leans on rapid revenue expansion, rising margins, and a future earnings multiple more often linked to mature tech winners. If you want to see exactly which long term numbers are doing the heavy lifting here, the full narrative lays out the step by step assumptions behind that fair value.

Result: Fair Value of $97.83 (UNDERVALUED)

However, this story can change if Neutron underperforms or is delayed, or if capital needs stay high while Rocket Lab continues to report annual net losses.

Another View: What the P/B Ratio Is Saying

That $97.83 fair value from the KiwiInvest narrative leans on long term growth and profitability. A simpler yardstick, the current P/B ratio, paints a tougher picture. Rocket Lab stands at 28.1x compared with 10.2x for peers and 3.9x for the wider US Aerospace & Defense group. With no fair ratio available yet, this rich multiple could be pricing in a lot that still has to be delivered.

Build Your Own Rocket Lab Narrative

If you are not sold on these assumptions or prefer to weigh the numbers yourself, it is easy to build your own view in minutes by using Do it your way.

A great starting point for your Rocket Lab research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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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.