Why Morgan Stanley Just Upgraded These Two Space Stocks

TLDR

• Morgan Stanley analyst Kristine Liwag upgraded the space sector to “Attractive” for 2026 following strong 2025 performance
• Rocket Lab and MDA Space were upgraded to Overweight with price targets raised to $105 and $46 respectively
• Iridium was downgraded to Equal-weight with price target cut to $24 from $37
• The bank expects gains driven by higher launch cadences, new products, policy support and market growth
• Rocket Lab aims to complete first Neutron launch in early 2026 while increasing Electron launch frequency

Morgan Stanley has turned bullish on the space sector for 2026. The investment bank upgraded its view to “Attractive” for the industry after strong performance in 2025.

Rocket Lab USA, Inc., RKLB

Analyst Kristine Liwag leads the Morgan Stanley team covering the sector. Liwag holds a five-star rating with a 66% success rate according to analyst tracking services.

The bank made specific upgrades to two space companies. Rocket Lab received an upgrade to Overweight with a new price target of $105, up from $67. MDA Space also got an Overweight rating with a price target increase to $46 from $32.

Iridium saw a downgrade in the analyst changes. The satellite communications company was cut to Equal-weight with its price target reduced to $24 from $37.

Growth Drivers for the Space Industry

Morgan Stanley expects several factors to drive growth in 2026. Higher launch cadences will increase as companies ramp up rocket operations. New product introductions are planned across the sector.

Policy support from the U.S. government provides a tailwind for commercial space companies. Market maturation continues as the industry moves beyond its early stages.

Record launch activity marked 2025 as a banner year for space. The pace of satellite deployments increased throughout the year. Commercial space companies gained traction with customers.

Rocket Lab has specific milestones ahead this year. The company plans to complete its first Neutron rocket launch in early 2026. The Electron rocket will see increased launch frequency.

Company-Specific Catalysts

MDA Space trades at a discount compared to industry peers. Morgan Stanley believes the valuation gap has grown too wide. The analysts see strong potential for the stock to revalue higher in 2026.

Rocket Lab benefits from improved risk-reward dynamics according to the bank. A bright catalyst path lies ahead for the company this year. The Neutron launch represents a major milestone for expanding capabilities.

Iridium faces uncertainty in Morgan Stanley’s view. The company is executing a strategic pivot in its business model. The analysts cite incremental uncertainty in the early stages of this transition.

AST SpaceMobile and Intuitive Machines also operate in the space sector. These companies saw strong gains in 2025 alongside industry leaders. The commercial space market continues to expand beyond traditional government contracts.

SpaceX remains a major private player in the industry. The company led by Elon Musk could potentially hold an initial public offering in 2026. This would represent a major event for the commercial space sector.

The space industry recorded a banner year in 2025 across multiple metrics. Launch activity reached record levels as companies increased operational tempo. Policy support from the U.S. government continues to back commercial space development.

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