Pentagon Visit Underscores Rocket Lab’s Strategic Defense Role

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A high-profile visit from U.S. Defense Secretary Pete Hegseth to Rocket Lab USA's Long Beach headquarters has cast a spotlight on the company's growing importance to national security. The Secretary praised the firm as a cornerstone of the American defense industrial base during his tour last Friday, an event that followed closely on the heels of the company securing the largest contract in its history.

Accompanied by CEO Peter Beck, Secretary Hegseth inspected the company's 13,400-square-meter engine development center. Approximately 200 employees were present as he viewed production halls for the Rutherford and Archimedes rocket engines. Addressing the workforce, Hegseth stated, "You are the engine of America’s new arsenal of freedom to project our will anytime, anywhere." He further promised government backing for reliable contractors, affirming, "If you deliver for America, the government will have your back."

The timing of the visit aligns with President Trump's proposal for a record $1.5 trillion defense budget, representing a $900 billion increase for the current fiscal year.

Record Contract Fuels Investor Enthusiasm

The strategic interest from the Pentagon is well-founded. On December 19, 2025, Rocket Lab was awarded an $816 million contract by the Space Force to build 18 missile-tracking satellites for the PWSA (Proliferated Warfighter Space Architecture) program. This stands as the single largest contract award in the company's history.

Potential additional revenue from supplying components, solar solutions, and software to competing contractors within the same PWSA program is estimated at roughly $1 billion. Consequently, the total value flowing to Rocket Lab from the PWSA complex could reach up to $1.8 billion.

This news has propelled the stock to record highs. Since the start of 2026, shares have advanced approximately 25%, building on an already impressive gain of 188% throughout 2025.

Divergent Moves by Insiders and Institutions

The share price appreciation coincided with significant stock sales by company executives. Chief Financial Officer Adam Spice divested shares worth about $103 million, while other managers sold a combined $7.3 million in equity. These transactions introduced short-term volatility.

In contrast, institutional investors have been accumulating positions. Baillie Gifford increased its stake by 176% to 12.1 million shares, and The Vanguard Group boosted its holding by 5.4% to 41.8 million shares. Overall, institutional investors now hold nearly 72% of the company's shares.

Analyst Outlook Remains Positive Despite Lofty Valuation

Equity researchers maintain a constructive view, even as they acknowledge a demanding valuation. Needham raised its price target from $63 to $90 with a "Buy" rating, while Stifel lifted its target to $85. Baird upgraded the stock to "Strong Buy," and Bank of America issued a $60 price objective.

The average analyst price target sits at $61, though some targets are likely outdated following the recent sharp price movement. Rocket Lab's market capitalization now exceeds $45 billion, trading at about 70 times sales.

Upcoming Milestones: Earnings and Neutron Debut

The company is scheduled to report fourth-quarter 2025 results on February 26. Market experts anticipate a loss of $0.08 per share. For the third quarter, Rocket Lab had outperformed expectations, posting a loss of $0.03 per share on revenue that grew 48% year-over-year to $155 million.

A critical near-term milestone is the inaugural launch of the medium-lift Neutron rocket, planned for the first quarter of 2026. Furthermore, another launch of the smaller Electron rocket from Rocket Lab's New Zealand spaceport is scheduled for January.