Rocket Lab (RKLB) is emerging as an early-stage alternative to SpaceX, with the market taking valuation cues from SpaceX's implied valuation, Morgan Stanley said Monday in a research note.

The brokerage said Rocket Lab is following a similar path to SpaceX by scaling up rocket lift capacity, embracing booster reusability, and developing its own satellite constellation.

Morgan Stanley said it is introducing an updated valuation construct for Rocket Lab that draws parallels from SpaceX's historical valuation, discounted to risks from Neutron launch and the company's constellation build-out. This framework applies a baseline 40% discount to SpaceX's implied valuation in 2021, according to the note.

The firm expects Rocket Lab to execute its Neutron launch schedule, with one launch targeted for the end of the year, three in 2026, and five in 2027. For the Electron vehicle, the firm forecast 28 launches in 2026, and 34, 40, and 46 launches in 2027, 2028, and 2029, respectively.

Morgan Stanley said it revisited its valuation and updated its model assumptions, raising its price target for Rocket Lab to $68 from $20 while maintaining an equal-weight rating.

Shares of the company were up more than 3% in recent trading.

Price: 66.36, Change: +2.10, Percent Change: +3.27