/The%20front%20of%20a%20Rocket%20Lab%20corporate%20office%20by%20Emagnetic%20via%20Shutterstock.jpg)
Rocket Lab (RKLB) shares are inching higher on Wednesday morning after the commercial launch leader secured a major $266 million government contract. Under the announced agreement with the U.S. Space Force, the Nasdaq-listed firm will conduct 12 suborbital launches with options for six more through 2028.
The federal deal brings much-needed reprieve to Rocket Lab stock that has otherwise been under immense pressure in recent weeks, currently down more than 50% versus its May high.
Does the Military Contract Warrant Buying RKLB Stock?
The aforementioned firm-fixed-price agreement with the U.S. Space Force represents a significant win for RKLB’s defense portfolio.
Rocket Lab would provide the required services using its Hypersonic Accelerator Suborbital Test Electron (HASTE), with operations set to primarily take place at the Pacific Spaceport Complex in Alaska.
Investors are cheering RKLB stock because the company secured this competitive contract against top national defense rivals, which highlights the military's growing reliance on commercial providers for hypersonic testing and high-cadence payload deployment.
Note that Rocket Lab’s price-to-sales (P/S) multiple has compressed to a much more palatable 63x in recent weeks, which makes it even more attractive as a long-term holding at current levels.
Why Rocket Lab Shares Look Poised for Gains Ahead
Rocket Lab shares are in the green on July 22, primarily because the federal contract reinforces the firm’s evolution from a pure-play commercial launch provider into a high-margin integrated defense prime contractor.
The agreement adds to its already robust $2.2 billion order backlog, providing significant revenue visibility through the next two years.
High-margin HASTE missions are known to generate solid cash flow that management will use to fund the development of RKLB’s larger, reusable Neutron launch vehicle.
Crucially, winning such a huge competitive award validates Rocket Lab’s execution capabilities, solidifying its position as a go-to launch partner for national security missions.
Wall Street Remains Bullish on Rocket Lab
Wall Street analysts also believe that the recent selloff in RKLB shares has gone a bit too far.
The consensus rating on Rocket Lab remains at “Strong Buy,” with the mean price objective of about $114 indicating potential upside of more than 50% from current levels.
