Shares of space exploration company Intuitive Machines (LUNR) are up roughly 9% in the week since posting a mixed Q2 earnings report. The company beat earnings expectations while missing Street’s anticipated revenue target. The company is uniquely positioned to benefit from growing interest in lunar exploration and scientific discovery missions. Overall, the company’s innovative approach and potential for growth have led to a stock surging over 54% since the beginning of the year. Yet, it trades at a discount to industry peers, indicating stellar potential for further upside.
Intuitive Machines’ Developing Unique Expertise
Intuitive Machines is a diversified aerospace and defense firm specializing in space exploration. It offers products and services to support robotic and human exploration of the Moon, Mars, and beyond.
In recent news, Intuitive Machines teamed up with SEOPS, a leading provider of responsive space mission services. This partnership will see Intuitive Machines providing rideshare delivery services to SEOPS as the latter expands its offerings to include multiple destinations beyond Low Earth Orbit (LEO). This arrangement will occur after 2025, leveraging Intuitive Machines’ unique capability to deliver commercial assets to orbit and its experience in lunar exploration and scientific discovery missions.
Furthermore, the company awaits the forthcoming award of NASA’s Near Space Network Services (NSNS) contract, which Intuitive Machines believes it is in a prime position to win. The NSNS contract is key to providing comprehensive data services for navigation, prospecting, and communications around the moon. The contract will run for ten years with an estimated ceiling of $542 million.
Intuitive’s Recent Financial Results & Outlook
The company has recently reported its Q2 2024 results. Revenue of $41.41 million fell short of analysts’ expectations of $46.60 million, though marked an impressive 130% year-over-year increase. The OMES, LTVS, and JETSON low-power nuclear satellite projects were major contributors to this growth. However, the quarter also saw a significant operating loss of $28.2 million, mainly due to the completion of the IM-1 mission and the noncash impact of changes in NASA CLPS contract adjustments. Earnings per share of $0.29 outperformed analysts’ estimates of -$0.25.
At the end of the second quarter, the company reported a contracted backlog of $213.0 million. Furthermore, the company expects its quarter-ending cash balance of $31.6 million to be sufficient to sustain operations for the following year.
Following second-quarter results, LUNR’s management has offered guidance for the full year, with revenue projected to be between $210 and $240 million, representing growth of 2.6x to 3x compared to the prior year. Cash reserves will continue to be bolstered in line with projected wins and planned operational activities supporting the growth strategy.
Imminent key awards, notably the Next Space Network Services (NSNS) and the forthcoming Commercial Lunar Payload Services (CLPS) award, are propelling the expansion of the backlog. The second mission’s completed lander is expected to be transported to the launch site in the final quarter, with the launch window extending into the first quarter of 2025.
Is LUNR a Buy?
The stock has been range-bound the past year, with a spike in March after a successful lunar landing thrust the company into the spotlight. It trades at the lower end of its 52-week price range of $2.09 – $13.25 and demonstrates positive price momentum, trading above the 20-day (3.81) and 50-day (4.06) moving averages. With a P/S ratio of 0.95x, the stock appears relatively undervalued compared to the Aerospace & Defense industry average of 2.1x.
Analysts following the company have been bullish on the stock. Most recently, B. Riley Securities analyst Mike Crawford initiated coverage on the stock with a Buy rating and a price target of $8. He noted that the company has superior capabilities to competitors vying for NASA’s multi-billion-dollar programs.
Intuitive Machines is rated a Moderate Buy. The price target for LUNR stock is $8.00, representing a potential upside of 102.02% from current levels.
Bottom Line on LUNR
Intuitive Machines is a leading provider of responsive space mission services, and a prospective win of NASA’s Near Space Network Services (NSNS) contract could lift the company higher. With additional accolades and opportunities pointing to a positive future, Intuitive Machines trades at a discount against industry peers – a strong indicator of further growth potential. LUNR presents an intriguing investment option for forward-looking investors interested in the potential of space exploration.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
