On Friday, Cantor Fitzgerald adjusted its financial outlook for Intuitive Machines Inc. (NASDAQ:LUNR), reducing the share price target to $10.00 from the previous $13.00. The firm maintained its Overweight rating on the stock. The revision comes as the analyst takes a more cautious stance on valuation in the short term, citing potential delays in the company's IM Missions timeline.
The revised price target reflects a recalibration of the firm's financial model, considering possible schedule impacts from NASA or SpaceX, which could affect Intuitive Machines' operations. As a result, Cantor Fitzgerald has lowered its FY24 revenue projection for the company to approximately $281 million, down from the earlier estimate of around $338 million. The valuation premium has also been adjusted to 1x from the earlier 2x.
Despite the reduced revenue forecast, Cantor Fitzgerald notes an improvement in the company's gross margin outlook. The firm now anticipates a positive FY24 gross margin of 3%, a significant improvement from the previously projected negative gross margin of -5%. This margin enhancement is expected to partially offset the slower revenue recognition from Intuitive Machines' upcoming IM Missions 2, 3, and 4.
The new $10 price target is derived from a blended valuation approach, based on 2025 estimated enterprise value to revenue (EV/Revenue) and enterprise value to EBITDA (EV/EBITDA), with equal weighting. The analyst highlights several key risks that could influence the company's performance, including landing anomalies, launch delays, regulatory risks, contract competition, supply-chain disruptions, complex technology, and safety concerns.
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