Space equities can have dramatic rises, but investors eventually need more than a compelling mission and a solid story. Intuitive Machines (LUNR) may be starting to deliver. Stifel upgraded the space-infrastructure company to Buy from Hold after Intuitive Machines reported a remarkable acceleration in new orders with a backlog that rose to $1.76 billion from $1.06 billion.
The analyst firm decreased its price target to $26 from $32, albeit the lower goal still suggested about 48% upside to the $17.56 share price indicated when the call was released. That seeming paradox is what makes the upgrade so interesting. Stifel isn't saying Intuitive Machines has suddenly become a low-risk investment.
The company is still not profitable; second-quarter results were a disappointment, and margins are thin as the business scales. Instead, the analyst firm thinks the recent downturn in the stock has shifted the risk-reward profile at the same time that the company's order book is getting much stronger. The backlog increased by $707 million in just one quarter, and the book-to-bill ratio was 4.5 times.
Revenue surged 310 percent year over year to roughly $206 million. Those data suggest Intuitive Machines is evolving into something bigger than the moon-landing stock many investors first discovered. For younger aerospace companies, backlog is one of the most useful figures investors have.
Revenue shows shareholders what the business accomplished in the quarter. Backlog provides visibility into awarded work that could convert into future revenue. Intuitive Machines' backlog rose to $1.76 billion from $1.06 billion, up about 66%.
The company had a book-to-bill ratio of 4.5x, implying that it booked new business at more than four times the rate of revenue recognized in the period. That is no guaranty of future profits. Contracts might be delayed, amended, or pricier to perform than intended.
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