Rocket Lab USA has captured its largest single contract to date, a $190 million award from the U.S. Department of Defense for 20 hypersonic test flights. This deal not only pushes the company’s total backlog past the $2 billion threshold for the first time but also solidifies its strategic positioning as a key provider of defense technology services.
Financial and Operational Momentum Builds
The significance of Rocket Lab’s defense segment is increasingly reflected in its financials. In the fourth quarter of 2025, its Space Systems division accounted for approximately 58% of total revenue, which stood at $180 million. Operationally, the company is demonstrating strong momentum, having sold 28 new launches in the first quarter of 2026 alone—a figure nearly matching its total for the entire previous year.
Analysts are taking note. Clear Street initiated coverage on Rocket Lab’s stock with a buy recommendation, setting a price target of $88 per share. Analyst Gregory Pendy projects the company will achieve an average annual revenue growth rate of around 35% through 2030.
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Details of the Strategic Pentagon Award
Structured as a four-year agreement, this contract falls under the Pentagon’s MACH-TB 2.0 program. Kratos Defense is the lead contractor, with NSWC Crane acting as a partner. Rocket Lab will utilize its HASTE (Hypersonic Accelerator Suborbital Test Electron) launch vehicle for the missions. Since the program’s inception in 2023, HASTE has maintained a flawless success record and is capable of reaching speeds in excess of Mach 5. The first flight under this new contract is scheduled to occur within the coming months.
Valuation Considerations and Future Challenges
Despite the positive developments, market expectations are already high. The stock currently trades at about 52 times its expected sales for 2026. Furthermore, the company’s announcement of a potential capital raise of up to $1 billion introduced volatility and has recently exerted downward pressure on the share price.
A significant unresolved question remains the timeline for the Neutron rocket program. The inaugural launch of this heavy-lift vehicle has faced another delay and is now tentatively planned for the fourth quarter of 2026. Until Neutron becomes operational, Rocket Lab’s business continues to rely solely on its Electron and HASTE platforms. While both are proven and reliable, they have inherent capacity limitations. The extent to which this major Pentagon award can offset delays in the Neutron program will become clearer with subsequent quarterly earnings reports.
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