Intuitive Machines Soars 24% Amid NASA Deal; Analysts Warn of Volatility and Unprofitability Risks

Technical Analysis

Intuitive Machines, Inc. (LUNR) experienced a significant surge in its stock price, closing at $9.28 on September 19, 2024, representing a 24.23% increase from the prior trading session. The Relative Strength Index (RSI) at 83 indicates that the stock is overbought, suggesting potential short-term volatility. The stock's MACD of 0.53 indicates positive momentum, while trading volume at around 88.47 million shares far exceeds its average of 9.85 million, further emphasizing heightened investor activity.

The stock price is currently above both the 50-day moving average of $4.59 and the 200-day moving average of $4.55, indicating a strong bullish trend. The lack of identified resistance levels suggests that the price may continue to rise, although the heightened volatility indicated by the ATR of 9.23 could lead to rapid fluctuations. Today's support level is noted at $7.47, providing a buffer against sharp declines.

Fundamental Analysis

Intuitive Machines is clearly on a growth trajectory, bolstered by a $4.82 billion contract from NASA, which positions the company as a vital collaborator in lunar exploration projects. However, it is essential to note that the company remains unprofitable, with an earnings per share (EPS) of -$0.17 and a price-to-earnings (PE) ratio of -54.59, reflecting ongoing investment without immediate returns. Analysts have provided a consensus price target of $10.75, with a median target at $10.50, driven by the potential growth from the newly secured contract.

The recent analyst upgrade, which raised the price target by 50%, reflects growing bullish sentiment in the market, reinforcing the stock's upward momentum. However, the speculative nature of the investment, given the company's current lack of profitability and volatility in the tech and space sectors, warrants caution.

Predictions

For the next trading day, LUNR is anticipated to experience continued volatility due to its overbought status. Prices may range between support at $7.47 and recent highs above $9.28. Over the upcoming week, should positive sentiment remain and volume sustain, LUNR could test the upper price targets as bullish momentum continues.

Intrinsic Value and Long-term Investment Potential

Analyzing intrinsic value, LUNR's current trading price appears undervalued relative to its potential growth, particularly with the recent NASA contract. The market cap of $583.93 million is modest compared to the size of the contract, suggesting the potential for substantial revenue growth. However, the company's unprofitability raises uncertainty regarding long-term sustainability and return on investment. As a result, while LUNR presents appeal as a speculative investment in a burgeoning market, investors must weigh the risks carefully against the projected growth.

Overall Evaluation

Intuitive Machines, Inc. is categorized as a 'Buy' candidate based on its recent bullish momentum, significant contract wins, and analyst support. However, the investment remains speculative with inherent risks due to unprofitability. Investors with a high-risk tolerance and a long-term perspective may find the stock attractive, particularly if the company can effectively leverage its newfound NASA partnership to establish consistent revenue streams.