Rocket Lab's FY23 Launch Revenue May Be Hampered By $22.5M Following Recent Satellite Mission Mishap: Analyst Cautions

Stifel analyst Erik Rasmussen reiterated the Buy rating on Rocket Lab USA, Inc. RKLBlowering the price target to $10 from $11.

After the market close, Rocket Lab reduced its Q3 FY23 financial outlook following its 41st mission launch issue last week.

RKLB lowered the Q3 outlook for revenue to $66 million-$68 million (vs. $73 million-$77 million earlier) against the consensus of $74.5 million.

The analyst notes that the company's 3Q revenue is only impacted by one less launch (from 4 to 3), while the space systems midpoint of guidance was unchanged.

However, according to the analyst's estimates, launch revenues in 2023 could be impacted by roughly $22.5 million due to the satellite launch mission's premature termination.

The analyst is encouraged by the relatively limited impact on GMs, demonstrating better-than-expected launch costs (BOM, labor, and direct OH) as ongoing cost optimization efforts are beginning to kick in. 

Management also does not anticipate any material incremental expenses in 3Q as a result of this anomaly, Rasmussen adds.

Depending on the results of its internal investigation and the timing of approval from the FAA, the analyst expects a more reasonable cadence of 3 launches in 4Q (from 5).

For 3Q23, Rasmussen cut the revenue estimate from $75.5 million to $67.5 million. The analyst's 3Q estimate for Electron launches is reduced from 4 to 3, with no changes to Space Systems.

The analyst's 3Q23 margin assumptions are expected to align with the updated guidance, which will slightly impact the analyst's Adj. EBITDA estimate from -$13.4 million to -$14.4 million due to the lower revenue contribution from launch services and to better align with previous guidance.

Price Action: RKLB shares are trading higher by 1.29% to $4.29 on the last check Wednesday.

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
date
ticker
name
Price Target
Upside/Downside
Recommendation
Firm
Posted In: Analyst ColorEquitiesNewsPenny StocksPrice TargetReiterationMarketsAnalyst RatingsTrading IdeasGeneralBriefsExpert Ideas
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!