On Wednesday, Intuitive Machines Inc. (NASDAQ:LUNR) received a strong vote of confidence as Canaccord Genuity maintained a Buy rating and a price target of $11.00 on the company's stock.
This decision comes in the wake of NASA selecting Intuitive Machines as the sole-source contractor for the substantial $4.82 billion Near-Space Network (NSN) contract. The contract, which includes a base period of five years with an option to extend for another five, will kick off with an initial task order of $150 million starting October 1.
Intuitive Machines is tasked with deploying relay satellites into lunar orbit to facilitate high-bandwidth communication between Earth and the Moon. The infrastructure is set to support NASA's Artemis lunar landings, the lunar terrain vehicle, and the robotic Commercial Lunar Payload Services missions. The NSN contract is seen as a crucial step forward, given the limitations of NASA's existing Deep Space Network and the need for enhanced data transmission capabilities for future lunar exploration.
The analyst from Canaccord Genuity views the contract as a transformational development for Intuitive Machines, significantly boosting the company's prospects. The contract is expected to serve as a high-margin catalyst for Intuitive Machines' existing lunar terrain vehicle and CLPS contracts.
In light of this, the firm's management has indicated that the first Khon lunar relay satellite is slated for deployment into lunar orbit aboard the IM-3 CLPS mission in 2025, utilizing the Nova-C lander as its transport to the Moon's surface.
The NSN contract is one of several anticipated revenue streams for Intuitive Machines, which also includes the OMES III and milestone payments for the IM-2 and IM-3 missions. These various sources of income are expected to contribute to the company's estimated revenues of $465 million in 2025.
The maintained price target of $11.00 by Canaccord Genuity is based on a 3x revenue multiple applied to the firm's 2025 revenue estimate. Moreover, investors are advised to anticipate a second phase lunar terrain vehicle award in mid-2025, which is projected to have a contract value of $1.5 billion and approximately $4.6 billion in expected task orders that may be distributed among multiple vendors.
In other recent news, Intuitive Machines has secured a substantial NASA contract worth up to $4.82 billion for communication and navigation services for missions spanning from geostationary orbit to cislunar space. This achievement aligns with the company's strategy to commercialize lunar activities.
In financial developments, the company's Q2 2024 revenue reached $41.4 million, over double compared to the same quarter in 2023, leading to an upward adjustment in its full-year revenue forecast to a range of $210 million to $240 million.
The company has also been awarded a $116.9 million contract to deliver six scientific and technological payloads to the Moon's South Pole. This represents the fourth such award for Intuitive Machines under the Commercial Lunar Payload Services initiative. Analyst firms Roth/MKM and Canaccord Genuity have maintained their Buy ratings on the company's stock, highlighting its strong backlog opportunities and expectations for top-line growth.
InvestingPro Insights
Amidst the significant contract win with NASA, Intuitive Machines Inc. (NASDAQ:LUNR) has shown a remarkable revenue growth of 86.74% over the last twelve months as of Q2 2024. This is a promising indicator for investors, aligning with the analysts' anticipation of sales growth in the current year. The company's market capitalization stands at $694.18M, reflecting investor confidence in its future prospects. Moreover, Intuitive Machines has demonstrated a strong return over the last three months, with a 46.74% increase, which further substantiates the positive sentiment around the company's stock.
While these metrics present an optimistic outlook, InvestingPro Tips suggest that potential investors should be aware of certain challenges. The company is noted for high price volatility, which could mean greater risk for short-term investors. Additionally, Intuitive Machines has been operating with weak gross profit margins, at -9.58%, and is not expected to be profitable this year. Nonetheless, with the new NASA contract and other revenue streams, the company's financial trajectory could experience a significant shift.
For a more comprehensive analysis and additional InvestingPro Tips on Intuitive Machines, investors can explore further on https://www.investing.com/pro/LUNR, where 11 additional tips are available to help guide investment decisions.
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