KeyBanc Capital Markets moved two commercial space stocks to Overweight from Sector Weight in a note published on Monday, saying recent volatility across the sector tied to SpaceX's large IPO created attractive entry points for investors in selected space companies.
The upgrades cover Rocket Lab and Firefly Aerospace. The brokerage's analyst, Michael Leshock, placed a $135 price target on Rocket Lab - implying roughly 40% upside from current levels - and described the company as "the clear #2 to SPCX," adding that it could "achieve a similar growth trajectory to SPCX over time."
KeyBanc highlighted several concrete metrics for Rocket Lab. The firm recorded the company's backlog at more than $2.2 billion as of the first quarter, a figure that it noted was up 20% sequentially and over 100% year-over-year. The note also referenced a possible $700 million contract award for a Mars Telecommunications Orbiter expected in the second half of 2026.
On manufacturing and systems integration, KeyBanc estimated Rocket Lab is more than 95% vertically integrated on its satellite bus and more than 90% vertically integrated on its Electron rocket, points the bank views as supportive of execution and long-term competitiveness.
For Firefly Aerospace, KeyBanc set a $50 target, indicating potential upside of more than 50%. The firm emphasized Firefly's positioning around NASA's lunar programs, highlighting that its Blue Ghost lander is "the only lander from a commercial space company to achieve a fully successful landing on the Moon."
The note also cited Firefly's recent $75 million MoonFall contract award from NASA and drew attention to the company's SciTec missile tracking software, which KeyBanc said "tracked ~1,000 missiles in the first 30 days" of the Iran conflict.
KeyBanc framed the broader market weakness surrounding SpaceX's IPO as "unwarranted and largely systematic," attributing the selloff to funds reallocating capital to accommodate the new listing rather than any meaningful change in the underlying fundamentals of commercial space firms.
To support a more constructive view on the sector, the bank pointed to accelerating NASA activity, constrained launch capacity and growing defense budgets. The note singled out roughly $56 billion designated for space-based systems in the proposed FY27 defense budget as one example of a durable tailwind.
Market price movements referenced in the note included Rocket Lab (RKLB) down 10.79%, Firefly Aerospace (FLY) down 19.05%, and SPCX up 19.22% at the time of reporting.
Context and implications
KeyBanc's upgrades reflect a view that short-term market dislocations related to a high-profile IPO created tactical buying opportunities across commercial space stocks with improving backlogs, meaningful vertical integration and exposure to government-funded programs. The firm's price targets quantify the upside it sees in both Rocket Lab and Firefly while pointing to specific contracts and technological capabilities that underpin that outlook.