News Flash: 9 Analysts Think Rocket Lab USA, Inc. (NASDAQ:RKLB) Earnings Are Under Threat – Yahoo Finance

Market forces rained on the parade of Rocket Lab USA, Inc. (NASDAQ:RKLB) shareholders today, when the analysts downgraded their forecasts for next year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

After this downgrade, Rocket Lab USA’s nine analysts are now forecasting revenues of US$287m in 2023. This would be a sizeable 54% improvement in sales compared to the last 12 months. Per-share losses are expected to explode, reaching US$0.26 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$322m and losses of US$0.22 per share in 2023. Ergo, there’s been a clear change in sentiment, with the analysts administering a notable cut to next year’s revenue estimates, while at the same time increasing their loss per share forecasts.

Check out our latest analysis for Rocket Lab USA

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The consensus price target fell 17% to US$9.97, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Rocket Lab USA, with the most bullish analyst valuing it at US$15.00 and the most bearish at US$3.00 per share. So we wouldn’t be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. With this in mind, we wouldn’t rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Rocket Lab USA’s past performance and to peers in the same industry. We would highlight that Rocket Lab USA’s revenue growth is expected to slow, with the forecast 41% annualised growth rate until the end of 2023 being well below the historical 55% p.a. growth over the last three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.7% per year. So it’s pretty clear that, while Rocket Lab USA’s revenue growth is expected to slow, it’s still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses next year, suggesting all may not be well at Rocket Lab USA. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. After such a stark change in sentiment from analysts, we’d understand if readers now felt a bit wary of Rocket Lab USA.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Rocket Lab USA going out to 2024, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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