ALBUQUERQUE, N.M. - Rocket Lab USA, Inc. (NASDAQ: RKLB), a prominent player in the aerospace sector, has entered into preliminary terms with the Department of Commerce for a potential $23.9 million investment under the CHIPS and Science Act.
This funding is aimed at enhancing the company's Albuquerque facility, where it manufactures compound semiconductors for spacecraft and satellites.
The agreement, which is yet to be finalized, could result in more than 100 new manufacturing jobs and increase the company's semiconductor production by 50% within three years. This expansion is intended to meet the rising demand for space-grade solar cells, a critical component for national defense and commercial space missions.
Rocket Lab's Albuquerque site, previously home to SolAero Technologies which was acquired by Rocket Lab in 2022, specializes in producing space-grade solar cells. These cells are used in various significant space programs, including the James Webb Space Telescope and NASA's Artemis lunar explorations.
The CHIPS and Science Act, which is fueling this expansion, also enjoys support from the State of New Mexico, which has pledged an additional $25.5 million in financial assistance and incentives to bolster Rocket Lab's efforts.
Sir Peter Beck, the founder and CEO of Rocket Lab, expressed pride in contributing to America's future through this expansion, backed by the CHIPS Office. New Mexico Governor Michelle Lujan Grisham and Senator Heinrich also highlighted the investment's role in reinforcing New Mexico's position in advanced manufacturing and national security.
Rocket Lab plans to claim the Department of the Treasury’s Investment Tax Credit, which could cover up to 25% of qualified capital expenditures. The funding, which is contingent on meeting certain milestones, is part of a broader initiative to stimulate private sector investment and create jobs within the United States.
The company, which has been operating in New Mexico for 25 years, has a track record of successful missions and is known for its Electron small orbital launch vehicle and the development of the larger Neutron launch vehicle.
The information regarding this expansion is based on a press release statement from Rocket Lab USA, Inc.
In other recent news, Rocket Lab USA, Inc. reported a record total revenue of $93 million for the first quarter of 2024, showing strong growth in their launch services and space systems segments. The company also announced a launch date for its 50th Electron rocket mission, a significant milestone. This mission, dubbed "No Time Toulouse," will deploy five Internet-of-Things satellites for Kinéis, marking the first of five dedicated launches aimed at establishing a 25-satellite constellation.
Also recently Goldman Sachs (NYSE:GS) began coverage on Rocket Lab shares, assigning the aerospace company a Neutral rating and setting a price target of $4.50. Despite the firm's cautious stance on Rocket Lab's financial performance and profitability trajectory, it acknowledged the company's potential for growth as it scales its launch operations.
Analyst firms TD Cowen and Stifel maintained their Buy ratings on Rocket Lab shares, despite adjustments in the company's stock price targets. Rocket Lab is also set for the second NASA PREFIRE launch, aimed at studying climate change.
InvestingPro Insights
As Rocket Lab USA, Inc. (NASDAQ: RKLB) gears up for a significant expansion of its Albuquerque facility, the company's financial health and market potential become focal points for investors. According to InvestingPro data, Rocket Lab boasts a market capitalization of $2.25 billion and has experienced a robust revenue growth of 25.43% over the last twelve months as of Q1 2024. This growth is further exemplified by a staggering quarterly revenue increase of 68.99% in Q1 2024, signaling strong sales momentum.
InvestingPro Tips underscore the company's solid financial position, highlighting that Rocket Lab holds more cash than debt on its balance sheet, which is a reassuring sign for investors considering the company's expansion plans. Furthermore, analysts are optimistic about Rocket Lab's sales growth in the current year, which may be further catalyzed by the new investment under the CHIPS and Science Act. However, it is worth noting that analysts do not anticipate the company will be profitable this year, and the firm is trading at a high Price / Book multiple of 4.69, suggesting a premium valuation.
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