Rocket Lab (NASDAQ:RKLB) has entered a local bear market, mirroring the performance of other space companies that have declined following the recent SpaceX (NASDAQ:SPCX) IPO. RKLB is down 28% from its all-time high, erasing $24 billion in market value as its market capitalization falls to $62 billion.

Analysts are Optimistic About Rocket Lab Stock

Rocket Lab stock has retreated because of the ongoing profit-taking following the SpaceX IPO. At its peak on May 27, it was up by 3,450% from its lowest level in August 24.

The ongoing retreat has coincided with that of other top space companies like Intuitive Machines, Planet Lab, and RedWire. The closely-watched Procure Space ETF (NASDAQ:UFO) has dropped by 26% from its highest point this year.

This concept is known as buy the rumor, sell the news. It happens when investors buy an asset before a major event and then retreat when it eventually happens. 

Still, despite the ongoing retreat, some analysts are optimistic that the stock has more upside to go. KeyCorp’s Michael Leshock boosted his target to $135, up by 26% from the current level. 

Stifel Nicolaus’ Eric Rasmussen hiked his target to $132, while New Street pushed its target to $150. Other analysts from Deutsche Bank, Needham, and Cowen have targets of $120.

While Rocket Lab is quite overvalued, it has some notable catalysts that may help to boost its growth over time. The most recent data showed that its revenue and backlog are growing. Its revenue rose by 63% to $200 million, driven by its Electron launches. Also, it booked 31 missions, with the management noting an inflection across its orbital and suborbital launches. 

The company expects that its business will continue to do well in the near term, driven by Electron, HASTE, and in the future, Neutron. HASTE, its supersonic solution for the Department of Defense, is now accounting for a third of its backlog.

Analysts expect Rocket Lab’s double-digit growth momentum will continue. The average estimate is that its annual revenue will jump by 52% this year to $915 million, followed by $1.2 billion next year. 

Rocket Lab shares will also benefit from the upcoming entry into the Nasdaq 100 Index tomorrow (June 22). This is important as funds tracking the index will need to buy the stock. 

RKLB Stock Price Technical Analysis

Technical analysis points to further RKLB stock may be on the cusp of a bullish breakout. The Average Directional Index (ADX) has slumped to 25 from the year-to-date high of 43. A falling ADX figure is a sign that a trend is losing momentum. 

The stock has also retested the key support level of $99, its highest swing in January. This is known as a break-and-retest pattern, which often leads to a continuation. It has also failed to move below the 100-day moving average.

Therefore, the stock may reverse and start rising soon. If this happens, the next level to watch will be the psychological of 150. 

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