Small-cap growth stocks offer the potential for substantial wealth creation over the long term, though they can also carry heightened risk. For investors seeking opportunities in this area of the market, Intuitive Machines (LUNR) is shaping up as a promising investment in the space exploration niche, with the stock recently soaring higher after its latest contract win from NASA.
About Intuitive Machines Stock
Valued at $1 billion by market cap, the company grabbed global headlines in February after successfully landing its Odysseus spacecraft on the moon, which marked the first lunar landing in 50 years. While LUNR has yet to revisit the all-time highs it set back then, the company has continued to secure additional key contracts for its space tech, establishing itself as a compelling small-cap investment in this burgeoning industry.
LUNR stock has more than doubled over the last 52 weeks, and has soared 214.3% on a YTD basis. The stock is easily outperforming the broader Russell 2000 Index (RUT), which is up just 10% in 2024 - but with Intuitive Machines stock down 39% from its February highs at $13.25, it's still possible to buy the dip in LUNR.
LUNR Scores a New NASA Contract
On Sept. 17, NASA awarded LUNR a near space network (NSN) contract for a base period of five years, with the option to extend the contract for another five years.
Under the terms of the contract, Intuitive Machines will provide communication and navigation services for near space missions from Earth's surface to beyond the moon. The partnership will highlight LUNR's lunar satellite constellation, which the company says provides enhanced data and transmission services and autonomous operations.
The contract has a maximum potential value of $4.82 billion, and "marks an inflection point in Intuitive Machines’ leadership in space communications and navigation,” according to CEO Steve Altemus.
Prior to this contract, LUNR secured a deal with NASA in late August, worth approximately $117 million, under the agency's Commercial Lunar Payload Services (CLPS) program. Under the terms of that contract, NASA placed an order for the delivery of six science and technology payloads to the moon’s South Pole.
LUNR's Cash Runway
Those NASA deals are key for the young growth company, as Intuitive Machines is not yet profitable - and Wall Street isn't projecting consistent annual profitability until fiscal 2026.
In its most recent quarterly earnings report, LUNR fell short of consensus revenue estimates, and reported wider net losses on higher expenses tied to the February lunar launch. Revenue in the second quarter rose 130% year over year to $41.4 million, while the operating loss also more than doubled to $28.2 million.
The company guided for full-year revenue of $210 million to $240 million, and added that its cash balance of $31.6 million should be sufficient to fund operations for the next 12 months.
What's the Analyst Forecast for LUNR Stock?
Analysts are overwhelmingly optimistic about LUNR stock, with several backing their bullish views after the latest NASA win.
Benchmark analyst Josh Sullivan reiterated a "buy" rating with a price target of $10, writing, “LUNR’s path to becoming the preeminent lunar infrastructure player took a big step forward with NSN.”
Andres Sheppard of Cantor Fitzgerald, who also rates the stock a “buy” with a $10 price target, called the news “a significant catalyst and validation towards LUNR’s outlook and the company’s ability to continue to win contracts.”
B. Riley's Mike Crawford also backed a “buy” rating, and hiked LUNR's price target from $8 to a new Street-high of $12.
All five analysts tracking the stock rate it a “Strong Buy” equivalent, with the mean price target of $10.60 implying expected upside of 32%.
The Bottom Line on LUNR Stock
LUNR stock has broken out, but still has plenty of room to run before revisiting its highs - indicating further potential for growth. With the company capturing a strong market share through multiple NASA contract wins, LUNR is well-positioned to capitalize on the booming private space industry. However, investors should start small with LUNR, as the usual risks associated with unprofitable small-cap stocks remain.
On the date of publication, Nauman Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
