Rocket Lab Corp. (NASDAQ:RKLB) had not seen its stock downgraded in more than 18 months—but the streak came to an end when KeyBanc Capital Markets downgraded RKLB from Overweight to Sector Weight on Thursday. 

While the firm still considers Rocket Lab a high-quality leader in the space sector, the stock's recent surge has fully priced in several major growth catalysts. 

• RKLB stock is sinking. See the chart and price action here. 

It's Already Priced-In

The downgrade is primarily driven by the belief that the company's recent successes are well-known and reflected in its current valuation. The milestones include:

• Major Contract Awards: In December, Rocket Lab secured an $816 million contract from the Space Development Agency for Tranche 3, nearly doubling its backlog.
• Infrastructure & Technology: The company successfully opened its LC-3 launch pad in Virginia and has ramped up production of the Archimedes engine, which is estimated to be more than 90% complete for qualification.
• Favorable Policy: A December 2025 executive order on American Space Superiority and the appointment of Jared Isaacman as NASA Administrator have created a tailwind for commercial space companies over legacy defense contractors.

RKLB Valuation 

Rocket Lab’s stock has surged 280% year over year, reaching above $92.00 in January. 

• SpaceX Influence: Rumors of a $1.5 trillion SpaceX IPO sparked a sector-wide re-rating, benefiting Rocket Lab, KeyBanc noted.
• Premium Pricing: The stock currently trades at approximately 42x its estimated 2027 sales, notably higher than the historical 20-30x price-to-sales range SpaceX maintained during its early growth stages.

KeyBanc Still Likes The Stock

KeyBanc's main point of uncertainty remains the Neutron rocket, Rocket Lab's next-generation launch vehicle. The debut launch has been pushed to Q1 or later, and analysts are looking for a firm date to regain confidence in the timeline.

KeyBanc indicated they could become more constructive on the stock again if the following occur:

• A fully successful first launch of the Neutron rocket.
• Additional large-scale contracts that significantly increase the company’s backlog.
• Greater clarity on a potential long-term satellite constellation or services model.

RKLB Price Action: Rocket Lan shares took a hit following the downgrade, but had recovered slightly to trade 2.95% lower at $89.09 at the time of publication Thursday, according to Benzinga Pro.

Image: Shutterstock

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