High Risk, High Reward: Analysts Explain Why These Space Stocks Could Surge Despite Their Speculative Nature
TipRanks
5 min read
Undoubtedly, last year stands out as a pivotal year for humanity’s achievements in space exploration. The most notable accomplishment was the launch of NASA’s Artemis 1 mission, which marks the first steps towards returning humans to the Moon nearly half a century after the last crewed mission, Apollo 17.
In tandem with a growing cross-border commercial space travel sector, the initial success of Artemis is piquing investors’ interest in space stocks.
And for good reason. The space economy – astronomical observations, solar system mapping, unmanned probes, NASA support services, private satellite and manned vehicle launches – was worth $424 billion in 2022. Today, that total addressable market is only increasing, and experts forecast that the global space market may reach reach over $737 billion within a decade.
So, let’s take a look at two space stocks, at two different ends of this arena. According to Wall Street analysts, both offer investors a high risk/high reward opportunity, with significant potential returns. Here are the details.
First up, Intuitive Machines, is a company formed to offer supportive services in the space exploration industry. The company focuses on lunar surface access, lunar orbit delivery, and communications at lunar distance. For a speculative firm, Intuitive Machines is getting started on the right foot – the company already has several contracts with NASA, including one to conduct the IM-1 mission, a lunar landing at the Moon’s south pole, in June of this year.
The stock only started trading publicly on February 14 of this year, after completion of a SPAC business combination. The transaction, with Inflection Point Acquisition Corporation, brought some $55 million in new capital to Intuitive Machines, and saw the LUNR ticker make its debut on the NASDAQ index.
Since then, the stock has experienced wild swings in value in just a few trading sessions, rising as high as $136 and falling as low as $17.50. Interestingly, the company has not released any news or regulatory proceedings during these last two weeks.
Despite the crazy action, Intuitive Machines continues to be an intriguing space story, according to Canaccord analyst Austin Moeller.
“While Intuitive Machines still has much to prove as it begins its space odyssey to the Moon (which has historically been very difficult to land on), we believe the TAM for spacecraft manufacturing and in-space data services represents an attractive emerging growth opportunity for investors. We expect LUNR’s first IM-1 landing at the Lunar South Pole in June 2023 to be a major de-risking event that should drive positive sentiment in the stock as Nova-C becomes the first commercial moon lander and returns high-value lunar data to Earth,” Moeller opined.
Looking ahead, and assuming success for the company’s missions, Moeller rates LUNR shares a Buy along with a $35 price target. Shares could appreciate by 74%, should the analyst’s thesis play out. (To watch Moeller’s track record, click here)
Overall, Intuitive Machines has just 2 recent analyst reviews – no surprise, for a stock that has been public less than one month – but they are both positive and the shares have a Moderate Buy consensus rating. (See LUNR stock analysis)
The next space stock we’re looking at is Momentus, a company that is positioning itself to become indispensable as the space economy expands. The company’s management sees the development of a widespread infrastructure in space and Earth orbit, an infrastructure analogous to the tracks, stops, coaling stations, and water towers of the early railroads – and company that will be able to support that infrastructure, allowing space travel companies to focus on their own core competencies, will find itself in a strong position.
The company uses microwave electrothermal (MET) water propulsion systems that require only one third of the propellant used by chemical propulsion systems. Additionally, this type of propulsion allows payloads to be delivered three times faster than with solar electric ion propulsion.
Momentus is setting itself up to provide three services that it believes will become commonplace needs as humans move into space. First is in-space transportation, carrying paying customers’ satellites into precisely determined custom orbits. Second is hosted payloads, that will provide customers’ satellites with power, orientation, orbit keeping, and communications – a package dubbed Satellite-as-a-Service. And finally, Momentus will offer in-orbit services such as refueling, repositioning, and repairing satellites, and, at the end of a mission, de-orbiting them.
These services are possible through the capabilities of Momentus’ proprietary Vigoride space vehicle. The Vigoride is a space tug, able to move payloads up to 750 kilograms into and between low Earth orbits (LEO), as well as attaching to smaller satellites and providing power, communications, and station keeping. The vehicle has completed two demonstration missions, the most recent just this past January. Additional missions, to be launched on Elon Musk’s SpaceX Falcon rocket, are scheduled for April and October of this year.
Analyst Edison Yu, who covers tech-related stocks for Deutsche Bank, has cast his eye on Momentus – and he is impressed with what he sees.
“In orbit transportation vehicles or ‘space tugs’ are currently a nascent market but there will be a big need for logistics when using a rocket is not ideal/efficient… Momentus is aiming to play a role in these more complicated maneuvers,” Yu noted.
“At the moment, we are waiting for the most important parts of the mission involving the water-based MET propulsion system. The MET produces thrust by expelling very hot gases through a rocket nozzle. However, unlike a conventional chemical rocket engine, which creates heat through a chemical reaction, the MET heats propellant using solar microwave energy. Should this work, we believe the stock could re-rate meaningfully as this is differentiated technology that doesn’t require a lot of capital to commercialize,” Yu added.
In line with these comments, Yu rates MNTS stock a Buy and sets a $3 price target to indicate his confidence in an impressive 270% one-year upside potential. (To watch Yu’s track record, click here)
This micro-cap firm has slipped under the radar, and has only 2 recent analyst reviews. They both agree, however, that it’s a stock to buy, making the Moderate Buy analyst consensus unanimous. (See MNTS stock analysis)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
