Shares of Rocket Lab USA, Inc. (NASDAQ: RKLB) are rocketing up 5.09% in pre-market trading on Monday, as investors react to a series of positive developments for the space company. The surge comes amid growing optimism about Rocket Lab's government contracts and potential undervaluation.

Rocket Lab recently secured a spot in Phase 3, Lane 1 of the National Security Space Launch program by the US Space Force. This inclusion opens the door for potential contracts worth up to $5.6 billion, significantly boosting the company's future revenue prospects. The selection also demonstrates Rocket Lab's capability to launch sophisticated spacecraft that align with the government's plans for the next five years.

Adding to the positive sentiment, recent analysis suggests that Rocket Lab might be undervalued. The company is currently trading at $22.38, well below its estimated fair value of $41.22, based on discounted cash flow analysis. This potential undervaluation, coupled with the company's expanding role in hypersonic technology testing and national security missions, is likely contributing to investor enthusiasm.

Furthermore, Rocket Lab's Space Systems segment has shown robust growth, delivering $90 million in revenue in Q4 2024, up 7% sequentially. For the full year 2024, the segment's revenue reached $310.8 million, marking an impressive 80% year-over-year increase. The company also expects to more than quadruple the number of its spacecraft in orbit or having completed missions by the end of summer 2025, indicating strong growth potential in its core business.

As the market opens, investors will be watching closely to see if Rocket Lab can maintain this upward momentum, potentially closing the gap between its current market price and estimated fair value.