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Analysts Remain Steadfast on Rocket Lab After Neutron Test Failure
Reported by Ryan Hasson. First Published: 1/27/2026.
Key Takeaways
- Shares of Rocket Lab have fallen nearly 20% from recent record highs, following a Neutron test failure and uncertainty about its launch schedule.
- Neutron development remains on track, with the setback viewed as routine qualification testing.
- Analysts remain bullish, suggesting the sell-off may reflect short-term uncertainty and profit-taking rather than a change in the long-term outlook.
Shares of Rocket Lab (NASDAQ: RKLB) have pulled back sharply over the past week, closing Monday, Jan. 26, nearly 20% below their recent all-time high. The sell-off came despite continued momentum across the aerospace and defense sector and a recent successful Electron mission.
As MarketBeat has noted repeatedly, Rocket Lab's long-term valuation hinges heavily on the successful development of its medium-lift Neutron rocket. Neutron represents a step-change opportunity for the company, opening the door to larger payloads, higher-margin missions, and deeper exposure to defense and national security contracts. Unsurprisingly, any headline tied to Neutron tends to move the stock aggressively.
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Get the name and ticker of one stock positioned for this shift.That dynamic was on full display on Jan. 21, when Rocket Lab disclosed that a Stage 1 tank ruptured during qualification testing at its Long Beach, California, facility. The market's initial reaction was sharp: the stock dropped more than 10% in after-hours trading. In the days following that event, the stock failed to hold a bounce and sold off significantly from recent highs.
The news and recent price action have likely left some investors wondering whether the incident is overblown, materially alters Rocket Lab's timeline, or is simply part of routine testing.
A Routine Setback in Neutron's Development
According to Rocket Lab, the rupture occurred during a hydrostatic pressure test, part of the qualification process designed to push structures beyond their intended operational limits. The company emphasized that such failures are not uncommon during development testing and are a deliberate part of validating safety margins.
Rocket Lab said no damage occurred to surrounding facilities and that the next Stage 1 tank is already in production. Neutron's development program remains active.
What investors are watching most closely now is whether the incident results in another delay to Neutron's maiden flight, currently targeted for the first half of 2026. Rocket Lab did not provide an immediate timing update, saying it will assess the impact and deliver a schedule update during its fourth-quarter 2025 earnings call in February.
For a stock trading near record highs, the absence of near-term clarity was enough to spook momentum-driven investors, at least temporarily.
Progress Continues as Key Hardware Arrives
While headlines focused on the testing failure, Rocket Lab made progress elsewhere in the Neutron program. The company confirmed that its Hungry Hippo fairing, which has already cleared qualification testing, recently arrived at the Virginia launch site for the Neutron rocket.
Engineers will complete inspections in the coming days before preparing the fairing for additional pre-launch testing at Rocket Lab Launch Complex 3. The delivery highlights an important point: development is proceeding on multiple fronts even as individual components go through expected testing hurdles.
Analysts Largely Unfazed by the Sell-Off
Wall Street's reaction has been notably calmer than the market's initial response. Several analysts characterized the test failure as routine and necessary within the context of launch-vehicle development.
Bank of America reiterated its Buy rating on Rocket Lab and raised its price target to $120 from $60. TD Cowen made a similar move, maintaining its Buy rating on RKLB and raising its price target to $100 from $60 on Jan. 22, noting the event was standard qualification testing rather than a fundamental setback. Analysts also highlighted that no facility damage occurred and that replacement hardware is already in production.
Taken together, the pullback appears driven less by any deterioration in Rocket Lab's long-term thesis and more by short-term uncertainty tied to a headline-sensitive Neutron update.
With the stock up roughly 1,580% over the past three years, bursts of profit-taking after negative or ambiguous headlines are not unusual, particularly when they involve the company's most critical growth catalyst. As Neutron's development continues and key hardware arrives on site, the recent sell-off may ultimately prove more noise than signal.
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