The missile explodes when it makes contact with a ship's shields or engines (or when it runs out of fuel, in which case it explodes anyway). The reason it ricochets is for gameplay reasons. If it didn't ricochet, it would be only 60% as useful.

Missile
Category: Offensive
Range: Medium-Long
Ammunition: Single Use
Explosive: True

This long-ranged homing rocket uses a sophisticated targeting system, allowing it to lock on to an enemy vessel by tracking heat and energy signatures and cross-referencing the data with a continueous radar feed. Even if it fails to acquire a target, it is still a very devestating weapon.

While it doesn't turn very quickly, it is still a very tactical weapon as it can ricochet off walls, allowing it to hit targets that have just cleared a difficult corner series (such as a single (but not a double) hairpin).