Investing.com -- Shares of Rocket Lab USA, Inc. (NASDAQ: RKLB) surged 10% following the company’s announcement of its involvement in multi-billion dollar defense contracts with the U.S. and U.K. governments for hypersonic technology development. The contracts are set to expand the use of Rocket Lab’s Hypersonic Accelerator Suborbital Test Electron (HASTE) launch vehicle and other services.
Rocket Lab disclosed its selection by the U.S. Air Force for the Enterprise-Wide Agile Acquisition Contract (EWAAC), a $46 billion program designed for rapid technology acquisition. The contract extends through 2031 and aims to provide the Air Force with innovative technologies and solutions across various domains. Additionally, the U.K.’s Ministry of Defence selected Rocket Lab for its Hypersonic Technologies & Capability Development Framework (HTCDF), valued at approximately $1.3 billion, to develop advanced hypersonic capabilities for the U.K.
The company plans to bid for contracts and task orders under both programs using the HASTE launch vehicle, which is a suborbital variant of the Electron rocket, featuring a larger payload capacity and tailored for hypersonic technology tests. Rocket Lab’s CEO, Sir Peter Beck, emphasized the significance of contributing to the security of both nations and the company’s commitment to leading in hypersonic technology development.
Stifel analyst Erik Rasmussen reiterated a Buy rating and a $27.00 price target on Rocket Lab, highlighting the announcement as a key milestone for the company’s launch business and the HASTE variant. "While details are limited, and there the programs have many other suppliers that are also participating, we see this announcement as another key milestone for its launch business and its HASTE variant. It also demonstrates Rocket Labs prior success, where HASTE has already completed three successful launches for the U.S. DoD, and demonstrated its rapid launch capability with two launches from LC-2 within 21 days," said Rasmussen.
Rocket Lab’s announcement also underscores the company’s ability to deliver rapid launch capabilities, as evidenced by two launches from Launch Complex 2 within a span of 21 days for the U.S. Department of Defense. The company’s success in securing these contracts may strengthen its competitive position in the industry and provide long-term government contracts extending through 2031, while diversifying its government customer base.
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