MW A huge NASA contract has sent Intuitive Machines' stock skyrocketing. This analyst sees even more upside.
By James Rogers
Intuitive Machines is 'the leading beneficiary of NASA's lunar commercialization efforts,' says B. Riley Securities analyst Mike Crawford
Intuitive Machines Inc. shares skyrocketed this week after NASA awarded the company a contract worth up to $4.82 billion. Analyst firm B. Riley Securities sees even more lunar upside for the space-exploration company, which is now the "leading beneficiary" of the space agency's ambitious lunar commercialization effort.
Late Tuesday, Intuitive Machines (LUNR) announced that NASA had awarded the company the Near Space Network contract for communication and navigation services for missions in the near-space region, which extends from Earth's surface to beyond the moon.
The company's shares soared on the news, ending Wednesday's session up 38.3% and climbing 24.2% Thursday to close at $9.28.
Related: Intuitive Machines stock surges on NASA contract worth up to $4.82 billion
Boosted by the new NASA contract and with the potential for Intuitive Machines to strengthen its relationship with the space agency, B. Riley Securities raised its price target for the company's stock to $12 from $8. The analyst firm also maintained its buy rating.
"Notably, while the value of this initial communications contract is consistent with our expectations, we were under the impression that NASA would initially select two or three awardees before down-selecting a long-term program winner," wrote B. Riley Securities analyst Mike Crawford, in a note released Wednesday. "We believe the agency's decision to sole-source this contract through Intuitive not only highlights the company's enviable position as the leading beneficiary of NASA's lunar commercialization efforts but also de-risks our investment thesis, namely that LUNR is quickly establishing itself as a full-service space exploration company on the cusp of layering in hundreds of millions of dollars of high-margin services revenue, enabling a long tail of robust FCF generation.
"Another significant catalyst, albeit not until mid-2025, that we look for to further LUNR's transition from low-margin mission and engineering work performed today to higher-margin, long-tailed services revenue is what we believe will be a phase 2 Lunar Terrain Vehicle (LTV) win for itsMoon Racer team." Crawford added that Intuitive Machines is "prime to an impressive array of subcontractors" including Boeing Co. $(BA)$, Northrop Grumman Corp. $(NOC)$, Michelin (FR:ML), AVL RACETECH , and Roush Performance. B. Riley sees the potential phase 2 LTV win driving Intuitive Machines shares higher towards the analyst firm's raised $12 price target.
Related: With huge NASA contract, Intuitive Machines closer to becoming 'preeminent lunar infrastructure player', says analyst
Intuitive Machines has already won part of the Lunar Terrain Vehicle contract. Earlier this year NASA awarded the space-exploration company a $30 million contract to complete a feasibility roadmap for the LTV rover using Intuitive Machines' Nova-D lunar lander.
The company's IM-1 mission made history earlier this year when the company's Odysseus lander became the first commercial lander to successfully land on the moon's surface. IM-1 was the first of three missions to the moon as part of NASA's Commercial Lunar Payload Services $(CLPS)$ initiative to deliver science and technology to the moon's surface. The company expects to ship its next moon lander to its launch site in the fourth quarter, with the launch window for the IM-2 mission extending through the first quarter of 2025. The third flight, IM-3, which will land at the moon's Reiner Gamma region, is expected to launch in the fourth quarter of 2025.
Analyst firm Benchmark also sees Intuitive Machines as a leading player in lunar infrastructure. "NASA clearly views LUNR's heritage as elite given NSN, LTV, and IM missions," Benchmark analyst Josh Sullivan wrote in a note this week. "However, NSN also provides significant backlog and long-term financial stability, something many space peers lack. LUNR's path to becoming the preeminent lunar infrastructure player took a big step forward with NSN." Benchmark maintained its buy rating and $10 price target for Intuitive Machines.
Related: Intuitive Machines targets early 2025 for next moon launch
All of the six analysts surveyed by Factset have a buy rating for Intuitive Machines.
Commercial moon landings are considered important scouting missions for NASA's Artemis moon-exploration program. Earlier this year, NASA said it is targeting September 2025 for its first crewed Artemis mission around the moon, and September 2026 for its Artemis mission to land astronauts near the lunar south pole.
Intuitive Machines shares have risen 263.2% in 2024, outpacing the S&P 500 index's SPX gain of 19.8%.
-James Rogers
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September 20, 2024 07:43 ET (11:43 GMT)
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