Firefly Aerospace (FLY) is seeing growing demand beyond its launch business and a strengthening lunar outlook following NASA's Artemis strategy shift, while an early Golden Dome award adds to potential opportunities, Morgan Stanley said in a note Tuesday, while cautioning that risks remain.

Firefly is increasingly seen as more than a launch company, and NASA's revised lunar exploration plans are expected to support demand.

The company is also investing to meet that demand, including building a new lunar lander cleanroom about four times the size of its current footprint, the investment firm said.

Morgan Stanley said, however, that while the growing demand is encouraging, technical and execution risks remain, and noted the company's valuation is at a premium to peers with some success already priced in. It added that NASA's updated lunar plans are promising but still at an early stage.

The investment firm maintained its equal-weight rating on Firefly Aerospace and raised its price target to $37 from $33.

Shares of Firefly were down nearly 2% in Tuesday trading.

Price: 32.80, Change: -0.57, Percent Change: -1.71