SpaceX in Miniature: Morgan Stanley Forecasts a 260% Rise in Rocket Lab's Stock Price Over the Course of a Year

Morgan Stanley, one of the world’s largest investment banks, has sharply raised its forecast for Rocket Lab shares, seeing the company as a smaller version of SpaceX. According to The Motley Fool, investors looking to bet on both space and artificial intelligence at once would be better off with Elon Musk’s company, while those who want to invest exclusively in the space sector should choose Rocket Lab.

On July 8, Morgan Stanley analyst Christine Livag raised her 12-month price target for Rocket Lab shares from $185 to $293 under an optimistic scenario. This is 259% higher than the closing price on Wednesday, July 8, and 157% higher than the market consensus. The bank’s base case forecast, however, remained unchanged at $105 with an “Overweight” rating (corresponding to a buy recommendation), according to 24/7 Wall St.

The reason for the revision is that Rocket Lab is expanding beyond launch services. “SpaceX has demonstrated that the main value in the space economy is created not by launches themselves, but by owning unique infrastructure in orbit and monetizing high-margin services built on top of it,” Livag explained (as quoted by MarketWatch).

In late June, Rocket Lab agreed to acquire Iridium Communications for $8 billion—a deal described as a shortcut to developing orbital services. Iridium holds licenses for radio spectrum and satellite internet with millions of subscribers, although it is not considered a direct competitor to Starlink. “We believe this deal significantly strengthens Rocket Lab’s strategic position by expanding its presence beyond rocket launches into satellite communications,” says Livag. According to her, the deal could bring Rocket Lab closer to SpaceX’s vertically integrated model.

For the stock to reach $293, the market capitalization would need to rise from the current $47.15 billion to approximately $184.3 billion (with 629 million shares outstanding). This would require three conditions:

— the timely and successful debut of the Neutron medium-class reusable rocket;

— closing the deal with Iridium in mid-2027;

— major contracts under the Golden Dome and SHIELD programs, which are expected to bring Rocket Lab $151 billion in orders.

The main risk is a delay in Neutron’s timeline amid ongoing losses and the dilution of shareholders’ stakes due to additional share issuances, according to 24/7 Wall St.

SpaceX doesn’t just make money from space: it owns the artificial intelligence developer xAI and has other technology ventures. The markets the company is targeting are estimated at $28.5 trillion—and almost all of that ($26.5 trillion) is in neural networks. Rocket Lab, on the other hand, operates exclusively in the space industry.

The difference in their scale is enormous: SpaceX’s revenue in 2025 is projected to be $18.7 billion, compared to $602 million for Rocket Lab. But both are expensive relative to their sales: about 110 times annual revenue for SpaceX and 82 times for Rocket Lab. Investors are paying a premium up front for future growth, notes The Motley Fool.

"For investors looking to bet on the technologies of the future—including space and artificial intelligence—SpaceX might be a good fit. But if you want to invest exclusively in space, Rocket Lab is a better buy. Just keep in mind: if you buy any of these stocks today, you’ll be paying a hefty premium, so make sure your position size is commensurate with that risk and hold it as part of a well-diversified portfolio,” concludes The Motley Fool.

Morgan Stanley initiated coverage of SpaceX shares with a base price target of $300 and a bullish scenario of up to $600. On July 8, the stock fell 0.8% to $148.3. This is 10% above the IPO price ($135 per share), but already below the opening price on the first day of trading.

This article was AI-translated and verified by a human editor