Rocket Lab USA Inc (NASDAQ: RKLB) is a stock that's struggled to properly get going in recent years despite multiple attempts. The launch service provider shot to prominence during the pandemic but, like most growth-focused tech stocks at the time, saw its shares collapse once rates started to increase. For Rocket Lab, this meant an 80% slide that only really bottomed out twelve months ago. 

Since then, though, it's had several decent rallies, including a 110% move that peaked last July. Through all these ups and downs, Rocket Lab's prospects have been extensively covered by the MarketBeat team. Only last month, our team reviewed its outlook for 2024 in detail, and it's starting to look like its bullish stance has been justified. 

Bullish upgrade

Earlier this week, the team at KeyBanc Capital Markets kicked off their coverage of Rocket Labs with an Overweight rating and an $8 price target. Considering shares closed out Thursday's session at $4.85, the expected 65% upside should be enough to tempt most investors. Sure, the stock might be a long way from profitability, but everything is trending in the right direction. 

Rocket Lab's revenue keeps increasing quarter over quarter, and they're landing some significant contracts. Last month saw them win a U.S. government contract worth $515 million, which will see them design, manufacture, deliver and operate 18 space vehicles. It was partly because of this kind of backing from such a customer that led to KeyBanc's bullish stance. 

Analyst Michael Leshock noted how the demand for both launch services and satellite manufacturing is increasing rapidly, and Rocket Lab is well-positioned to meet this demand. In addition, government budgets for space applications have consistently risen over the past decade, providing additional backing for the company's business, as demonstrated "by recent long-term contract wins.” Leshock was also impressed by Rocket Labs' comparatively strong track record of hitting production and testing milestones versus some of its peers and believes the company is trading at a significant discount compared to its valuation right now. 

Getting involved

Beyond the KeyBanc update from this past week, investors considering getting involved also have last month's Overweight rating from Cantor Fitzgerald supporting the long argument. The prospect of a fall in interest rates this year will also do the stock's prospects no harm at all, as lower rates mean lower borrowing costs, thus making it cheaper and easier for Rocket Labs to fund its growth. 

Like with all these early-stage tech stocks, though, and in particular those that are right on the edge of technology and science fiction, a certain degree of volatility must be expected. For example, having enjoyed a decent run through Christmas, Rocket Lab's shares have softened somewhat so far this year and are currently down 20% in the past three weeks. 

It's looking like this pullback is already being viewed as a buying opportunity, though, with ARK Invest's Cathie Woods adding to her already sizable position of Rocket Lab shares in the ARK Autonomous Technology & Robotics ETF (BATS: ARKQ). The current institutional ownership percentage is now almost 55%, which is an impressive number for a stock currently trading below $5. This points to strong confidence in the company's ability to continue executing at a high level and delivering consistent growth for the foreseeable future. 

The stock will need to stay above the $4.50 level to convince investors this is only a temporary pullback and not the start of a longer-term downtrend. Assuming it can do so, then it shouldn't take too long to properly consolidate around the upper $4 mark before trending up towards last month's high of $6 and then on towards the fresh price target of $8.