Rocket Lab (RKLB) is back in the spotlight after completing the U.S. Space Force’s VICTUS HAZE mission ahead of tight timelines, while also moving to buy Iridium Communications in a US$8b all-stock deal.

The latest VICTUS HAZE success and Iridium deal headlines come against a mixed backdrop for Rocket Lab’s stock, with a 1-day share price return of 2.71%, a 30-day share price return down 23.03%, a 1-year total shareholder return of 76.70%, and a 5-year total shareholder return of more than 6x.

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Rocket Lab’s win on VICTUS HAZE and the Iridium all stock deal have pushed the stock back into focus. The real question now is whether today’s price already reflects that shift or still leaves room before waiting makes sense.

Most Popular Narrative: 7.3% Undervalued

Based on the most followed narrative, Rocket Lab’s fair value of $85.04 sits above the last close at $78.81. This frames the current pullback as a potential discount rather than a full rerating.

The defense pivot is the most underappreciated part of this story. Combined SDA Tranche 2 and Tranche 3 awards now exceed $1.3b, and management disclosed on the Q4 2025 call that these contracts convert on a 10/40/40/10 schedule. That means the bulk of the $816m Tranche 3 award will not hit revenue until 2027 and 2028, investors modelling on TTM revenue are looking at the wrong number entirely.

Want to understand why this narrative still lands above today’s price? It leans on powerful revenue expansion, sharper margins, and a profit profile that looks very different to today. The full story connects those moving parts into one valuation roadmap.

According to ClaudeAnalysis, that roadmap uses a specific revenue ramp, margin lift and future earnings profile that, when discounted at 7.57%, supports a fair value modestly higher than where Rocket Lab currently trades. The key question for you is how much conviction you have in those underlying assumptions versus the execution and contract timing risks around them.

Result: Fair Value of $85.04 (UNDERVALUED)

However, this Rocket Lab narrative still hinges on Neutron execution and the timing of large defense contracts. Either of these factors could quickly reset expectations if they disappoint.

Another View on Rocket Lab’s Valuation

The first take on Rocket Lab leans on user narrative work and fair value estimates, but the SWS DCF model also points to the stock trading below an assessed future cash flow value of $82.36 at a last close of $78.81. If both line up, how much mispricing is really left on the table?

For a closer look at how the cash flow assumptions stack up, including the treatment of growth, margins, and discount rates, it is worth unpacking the full SWS DCF model for Rocket Lab. This starts with how it arrives at that $82.36 figure, before layering in your own expectations. Look into how the SWS DCF model arrives at its fair value.

Next Steps

With mixed sentiment running through this Rocket Lab discussion, it is worth acting quickly to review the numbers, stress test your assumptions, and weigh both sides of the story using the 2 key rewards and 3 important warning signs.

Looking for more investment ideas beyond Rocket Lab?

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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.