Morgan Stanley sharply increased its bull case for Rocket Lab after the company’s $8 billion Iridium acquisition, signaling a new phase in the competition to capture recurring revenue from satellite connectivity and launch services
This summer, Rocket Lab has drawn renewed attention as investors and analysts weigh whether the company could become the next major force in commercial space, second only to SpaceX. The comparison is tempting but complicated: SpaceX, now valued near $2 trillion after its June IPO, operates at a scale Rocket Lab has yet to reach. Rocket Lab’s market capitalization remains under $50 billion, but a recent move has shifted the conversation from speculation to serious analysis among Wall Street firms.
The catalyst was Rocket Lab’s agreement to acquire Iridium Communications in an $8 billion cash-and-stock transaction. Iridium operates a global satellite network with more than 2.5 million active subscribers and established spectrum rights, providing a ready-made platform for Rocket Lab to expand beyond launch services and satellite manufacturing. According to reporting by TheStreet, Morgan Stanley responded by raising its bull-case price target for Rocket Lab shares to $293, up 58% from its previous estimate, while maintaining a base-case target of $105. The sharp increase in the bull case reflects the potential for Rocket Lab to capture a larger share of the space-based connectivity market, though the firm remains cautious about the company’s ability to match SpaceX’s scale or profitability.
Operational Edge and Strategic Shift
Rocket Lab’s Electron rocket is now the second-most-used launch vehicle in the United States and third globally, trailing only SpaceX and China’s state-backed programs. This operational record has given Rocket Lab credibility in a sector where reliability and launch frequency are rare. The company is also developing the Neutron rocket, designed to carry heavier payloads at lower cost—a strategy that echoes SpaceX’s use of the Falcon 9 to disrupt launch pricing.
Until now, Rocket Lab’s business model stopped at providing launch services and building satellites for other clients. The Iridium acquisition is intended to close the gap with SpaceX’s Starlink, which generates recurring revenue from its own broadband satellite constellation. By acquiring Iridium’s established network, Rocket Lab gains immediate access to a profitable, subscription-based business, bypassing the years and billions typically required to build such infrastructure from scratch.
Financial Impact and Market Response
Iridium’s business is already profitable, with an EBITDA margin near 55%—a rarity in the commercial space sector, where most companies, including Rocket Lab, are still operating at a loss. Investors responded quickly to the deal announcement, sending Rocket Lab shares up roughly 16% on the day, based on data from Reuters. The acquisition also positions Rocket Lab to offer vertically integrated services, from launch to satellite manufacturing to end-user connectivity, a model that has proven lucrative for SpaceX.
Morgan Stanley’s revised analysis assumes Rocket Lab could eventually capture about 10% of the value it assigns to comparable segments of SpaceX’s launch and connectivity businesses. The firm is careful to note that Iridium’s network and Starlink serve different markets: Iridium specializes in low-bandwidth, mission-critical communications for government, aviation, and maritime clients, while Starlink targets high-capacity broadband for consumers and businesses. As a result, Rocket Lab is not positioned to compete directly with Starlink for home internet customers, and the firm’s base-case price target remains unchanged.
Industry Trends and Competitive Landscape
The move to acquire Iridium reflects a broader trend in the satellite industry, where consolidation is accelerating as companies seek to secure their own networks and recurring revenue streams. With SpaceX now publicly traded and its business model under constant market scrutiny, rivals can benchmark the value of integrated launch and connectivity operations in real time. This dynamic has prompted other major players, such as Amazon, to pursue acquisitions in the sector, and has led SpaceX itself to seek additional spectrum assets.
Rocket Lab’s acquisition of Iridium may also signal a narrowing window for competitors to secure strategic assets. As more companies lock up spectrum rights and operational networks, those left without a proprietary platform could find themselves at a disadvantage, with fewer opportunities to buy their way into the market.
As of July 7, Rocket Lab shares closed at $83.41, well below their 52-week high of $151. The stock’s wide gap between current price and the most optimistic analyst targets underscores both the potential upside and the significant execution risks that remain. Investors will be watching closely to see whether Rocket Lab can successfully integrate Iridium and deliver on the promise of a vertically integrated space business.
According to Rocket Lab’s most recent filings, the company reported annual revenue of $1.2 billion for the fiscal year ended March 31, 2026, up from $850 million the previous year. Iridium’s latest quarterly report showed revenue of $230 million and net income of $68 million, with a subscriber base that has grown steadily over the past five years. These figures highlight the scale of the combined business and the potential for recurring revenue to improve Rocket Lab’s financial profile.
Vertical integration in the space industry—where a company controls everything from launch to satellite manufacturing to end-user services—can create both operational efficiencies and new revenue streams. But it also introduces complexity, as companies must manage diverse technologies, regulatory requirements, and customer segments. For investors, the key questions are whether Rocket Lab can maintain its launch reliability while scaling up its connectivity business, and whether the Iridium acquisition will deliver the anticipated financial and strategic benefits without overextending the company’s resources.
