According to Credit Suisse, Rocket Lab stock isn’t ready to take off yet. Analyst Scott Deuschle has started covering the universe stock with underperforming ratings. He cited several risks to the company’s current valuation in a note to clients Tuesday and highlighted the challenging growth trajectory for the industry as a whole. “As discussed elsewhere in this report, we are concerned that the space economy could experience an adverse reaction due to the falling valuations of private and public space companies,” he said. . “Especially for RKLB, a lower valuation could lead to reduced capital spending from earth intelligence companies and the broader space startup ecosystem.” Along with Rocket Lab, Deuschle initiated Virgin Orbit’s stock with an underperforming rating, noting that both companies could be hit by challenging gross margins. He has a neutral rating on Spire Global and a higher rating on both Blacksky Technology and Mynaric. Deuschle writes: “The space industry is an industry primarily composed of capital-intensive companies operating in a competitive sector with challenging unit economics, high technical and operational risks, and high returns. The underlying rate does not support and resist the consolidation. “This is an industry where the only businesses that have shown the ability to consistently earn ROIC greater than their cost of capital are pure defense contractors and niche component suppliers.” Deuschle noted that Rocket Lab’s Neutron development – while offering competition – carries a range of financial risks and raised concerns about the product’s cost competitiveness against SpaceX’s Starship. The space shares on the board have suffered a decline in value in recent months, which Deuschle is expected to continue. This shortcoming could be particularly detrimental to Rocket Lab, he said, and lead to a decline in capital spending among earth intelligence companies. “Since the investment capital for these companies represents a sizable portion of RKLB’s launch opportunity, that drop in capital expenditure represents a one-to-one decline in the market,” said Deuschle. RKLB’s address,” Deuschle said. Shares of Rocket Lab are down about 66% this year. Deuschle’s $3 price target sees the stock drop another 28% from Tuesday’s closing price. – Michael Bloom of CNBC contributed reporting