Shares of Rocket Lab USA, Inc. (RKLB) surged 6.79% in Monday's trading session, following a significant price target upgrade from Morgan Stanley. The investment bank raised its target price for Rocket Lab to $68 from $20, more than tripling its previous valuation while maintaining an Equal Weight rating.

The substantial increase in Morgan Stanley's price target reflects a bullish outlook on Rocket Lab's future prospects. Analyst Kristine Liwag noted, "RKLB today is the market's clear small-launch leader with a new medium-class launcher nearing entry into service at a time when supply of launch capacity is constrained." Morgan Stanley's new valuation is based on a novel framework that compares Rocket Lab to an earlier-stage SpaceX, using SpaceX's 2021 implied valuation as a baseline but applying a ~40% discount to account for risks.

The comparison to SpaceX has sparked investor enthusiasm, with Morgan Stanley describing Rocket Lab as a "fast-follower" to SpaceX in launch reusability and satellite constellation services. The firm projects an approximate 41% compound annual sales growth rate for Rocket Lab from 2025 to 2029 and increased its launch cadence estimates for both the Electron and upcoming Neutron rockets. Despite acknowledging near-term risks associated with Neutron's debut flight later this year, Morgan Stanley forecasts Rocket Lab to achieve positive adjusted EBITDA in 2026 and positive free cash flow by 2027.

This positive outlook comes on the heels of recent contract wins for Rocket Lab, including a new partnership with the Japan Aerospace Exploration Agency and significant deals with Japanese satellite companies. These developments underscore the increasing demand for Rocket Lab's services and help solidify its position as a leader in the commercial launch market.