Why Rocket Lab Stock Skyrocketed Last Week

Key Points

• Rocket Lab stock surged nearly 32% with the help of bullish coverage from analysts.

• Citi and Bank of America both reiterated buy ratings on Rocket Lab and raised their respective price targets on the stock to $50 per share.

• Rocket Lab's growth-dependent valuation could create volatility for the stock, but the company has strong positioning in launch services.

• 10 stocks we like better than Rocket Lab ›

Rocket Lab (NASDAQ: RKLB) stock recorded another run of huge gains over the past week. The company's share price was gained 31.7% from the previous market's close. The S&P 500 index rose 0.6% over the same period of time.

Bullish coverage from analysts helped power massive valuation expansion for Rocket Lab stock over the past week and pushed the company to a new valuation high. Continued excitement surrounding short-term and long-term opportunities in the space industry also supported strong bullish momentum for the stock.

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Rocket Lab surged as analysts moved price targets higher

On July 14, Citi published new coverage on Rocket Lab that maintained a buy rating on the stock. The investment firm updated its coverage on the stock in conjunction with a broader review of its outlook on the defense and aerospace industries. In general, Citi's analysts continue to see very strong momentum in the categories -- and they raised their one-year price target on Rocket Lab from $33 to $50 per share.

Bank of America followed up with its own coverage update on Rocket Lab on July 16 and also reiterated a buy rating on the stock. The firm's analysts raised their one-year price target on Rocket Lab stock from $30 to $50 per share and cited opportunities surrounding the company's reusable Neutron rockets and strong positioning in end-to-end satellite launch and development technologies as bullish catalysts.

Following gains on the heels of the coverage, Rocket Lab stock actually closed out the week above Citi and Bank of America's price target of $50 per share.

What's next for Rocket Lab?

Space commercialization has emerged as a growth trend that's attracting a lot of excitement from investors, and Rocket Lab looks well positioned to capitalize on long-term growth opportunities in its corners of the space industry. After climbing 102% across this year's trading, the company now has a market capitalization of $23.7 billion and is valued at approximately 41 times this year's expected sales. Rocket Lab's stock run-up and growth-dependent valuation make its shares a risky play, but the company could still go on to deliver explosive returns for long-term investors if the business continues to rack up wins in launch services and other categories.

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Citigroup is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Rocket Lab. The Motley Fool has a disclosure policy.