On Thursday, Intuitive Machines Inc. (NASDAQ:LUNR) experienced a significant increase in its share price, which soared by 38% in contrast to the modest 0.2% rise in the Russell 2000 Index. The surge in trading volume reached 140 million shares, more than twice the number of the company's Class A shares in circulation. This rally followed the company's announcement on Wednesday evening that it had secured an exclusive initial contract worth $150 million for NASA's Near Space Network Services (NSNS) program. This program has the potential to expand to a value of $4.8 billion.
B.Riley has responded to this development by raising the price target for Intuitive Machines from $8.00 to $12.00, while reiterating a Buy rating on the stock. The decision by NASA to award the contract solely to Intuitive Machines was unexpected, as it was previously believed that NASA would choose multiple awardees before finalizing a long-term program winner. This move is seen as an endorsement of the company's leading role in NASA's lunar commercialization efforts and as a reduction in investment risk.
The analyst from B.Riley highlighted the importance of this contract in establishing Intuitive Machines as a full-service space exploration company poised to add substantial high-margin service revenue. This revenue is expected to support a sustainable generation of robust free cash flow (FCF). Looking ahead to mid-2025, another notable milestone for the company could be the phase 2 Lunar Terrain Vehicle (LTV) win for its Moon Racer team. This team boasts notable subcontractors such as Boeing (NYSE:BA) Co., Northrop Grumman Corp (NYSE:NOC), Michelin (EPA:MICP), AVL RACETECH, and Roush Performance.
In light of these developments, B.Riley has adjusted its financial projections for Intuitive Machines, raising the FY26 revenue and EBITDA estimates from $496 million/$40 million to $507 million/$42 million. The revised price target of $12 reflects a 3x projected enterprise value/sales valuation, up from the previous 2x, based on these updated estimates for FY26. The analyst asserts that this increase is justified by what is seen as more secure revenue forecasts and a growth rate that exceeds previous models.
In other recent news, Intuitive Machines Inc. has been making significant strides in its space exploration endeavors. The company was recently awarded a substantial $4.82 billion Near-Space Network (NSN) contract by NASA, which is expected to boost its future revenues. The NSN contract, which includes deploying relay satellites into lunar orbit, is anticipated to be transformational for Intuitive Machines, according to an analyst from Canaccord Genuity.
In addition to the NSN contract, Intuitive Machines has secured a $116.9 million contract from NASA to deliver six scientific and technological payloads to the Moon's South Pole. This is the fourth such award for the company under the Commercial Lunar Payload Services initiative.
On the financial front, Intuitive Machines reported a Q2 2024 revenue of $41.4 million, more than double compared to the same period in 2023, leading to an upward adjustment in its full-year revenue forecast to a range of $210 million to $240 million.
Analysts from Roth/MKM and Canaccord Genuity have maintained their Buy ratings on the company's stock. The companies highlight Intuitive Machines' strong backlog opportunities and expectations for top-line growth, with Canaccord Genuity maintaining a price target of $11.00 on the company's stock. Benchmark has also reaffirmed a Buy rating and a $10.00 price target.
InvestingPro Insights
In the wake of Intuitive Machines' (NASDAQ:LUNR) impressive contract win and subsequent stock surge, InvestingPro data and tips offer additional context for investors considering the stock's potential. According to real-time data, Intuitive Machines boasts a market capitalization of $960.28 million, reflecting the market's response to recent developments. Despite the company's rapid revenue growth, which saw an 86.74% increase over the last twelve months as of Q2 2024, InvestingPro Tips suggest caution, noting that the stock may be in overbought territory, with an RSI suggesting such. Additionally, while the stock has delivered a significant return over the last week, with a price total return of 31.05%, analysts do not anticipate the company will be profitable this year, and the stock trades at a high revenue valuation multiple.
It's important to consider that while the near-term outlook appears positive, with a strong contract in hand, the company operates with a negative gross profit margin of -9.58% and has a negative operating income margin of -39.11%. These figures, coupled with a P/E ratio of -4.36, paint a picture of a company that is still in the growth phase and may not yet be generating sustainable profits. Investors can find additional InvestingPro Tips by visiting the InvestingPro product page for Intuitive Machines, which includes a total of 15 tips that can provide deeper insights into the company's financial health and stock performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.