Why Intuitive Machines Stock Just Popped

Source The Motley Fool

Key Points

  • Intuitive Machines won Level 3 CMMI certification for its communications software.

  • The company needs successes like these to prove its can provide communications between Earth and moon.

  • Profitability for this space stock still remains a couple of years away.

  • 10 stocks we like better than Intuitive Machines ›

Intuitive Machines (NASDAQ: LUNR) stock scored a 2.5% increase through 11:45 a.m. ET Wednesday after the space company announced (yesterday) its latest achievement toward supporting a Near Space Network satellite relay linking Earth with the moon.

K3 Solutions, "a licensed CMMI Institute partner," says Intuitive, rates Intuitive at "Maturity Level 3 for software development" on a scale developed by the Capability Maturity Model Integration (CMMI).

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Not to scale image of a rocket traveling from Earth to the Moon.

Image source: Getty Images.

Intuitive's big tech news

But what does that mean?

Intuitive Machines explains that the Level 3 rating "demonstrates that Intuitive Machines meets NASA's standards for Class A human spaceflight together with well-defined and consistently applied engineering processes." It's basically a mark of approval confirming the company is one step closer to being able to provide reliable communications between Earth and astronauts on (and en route to) the moon.

The company also noted that the software designation supports "the delivery of dependable, high-performance solutions like lunar terrain vehicle services."

Is Intuitive Machines stock a buy?

Does this single software rating mean you should buy Intuitive Machines stock? Of course not.

It's technologically capable, but that doesn't mean Intuitive Machines will be able to sell its services, grow its revenue, and earn a profit on that revenue -- but initial indications are good. Intuitive has multiple upcoming contracts to send more landers to the moon for NASA, as well as the big $4.8 billion NSN contract, which is looking more likely to produce revenue and profit the more successes Intuitive scores.

Analysts forecast 21% revenue growth to more than $450 million next year, followed by GAAP profitability in 2027 and positive free cash flow in 2028. Intuitive Machines needs to hit all those marks to be a buy in my book. But this week's news still suggests good progress along that well-defined path.

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Rich Smith has positions in Intuitive Machines. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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