Aerospace and defense specialist Intuitive Machines (NASDAQ:LUNR) – which designs, manufactures and operates space products and services – saw its shares slip on Tuesday. Following a mixed-earnings report for the second quarter, investors weren’t feeling the love for LUNR stock. Nevertheless, for contrarian bulls, this rising member of the space economy could potentially offer outsized rewards.
Yesterday morning, Intuitive reported a loss per share of 5 cents. This figure significantly mitigated the expected red ink of 14 cents. However, in the year-ago quarter, the company managed to deliver earnings per share of 35 cents. All of these figures were adjusted for non-recurring items.
On the top line, Intuitive rang up sales of $41.41 million. Unfortunately, this result missed the expected estimate by 3.7%. Nevertheless, a positive takeaway was that in Q2 2023, the revenue haul only sat at $17.99 million. Thus, the overall growth trek is very much pointed in the right direction.
Although the financial disclosure wasn’t quite what analysts wanted, there was some meat on the table. Plus, experts believe that the space economy could become a multi-trillion-dollar ecosystem, affording significant upside potential. Therefore, LUNR stock only lost about 1.3%. Further, the bulls could be eyeballing a comeback.
Intuitive Machines Stock Could Fill the Gap
On Tuesday, LUNR stock represented one of the highlights in Barchart’s screener for unusual stock options volume. Specifically, total volume landed at 4,025 contracts against an open interest reading of 75,238 contracts. This figure represented a 78.41% lift against the trailing-month volume metric. Overall, call volume reached 3,170 contracts versus put volume of 855.
For full disclosure, the net trade sentiment on Tuesday in the options flow screener – which focuses exclusively on large transactions likely placed by institutional or professional investors – was slightly negative. However, among the bullish transactions, speculators targeted the 2025 Jan. 17 $4 call.
Targeting the $4 level seems sensible primarily because of where LUNR stock ended up yesterday, closing at $3.67. Moreover, in the afterhours session, LUNR moved up slightly to $3.69. Technically speaking, $4 represents a psychologically important and intuitive target.
What’s more, if LUNR stock manages to secure $4, then the next upside target could well be $5. That’s because the bulls may attempting to fill the gap. At $5, this level represents the last support line that eventually failed. By logical deduction, the bulls will want to secure this level.
Trade of the Day: Buy LUNR Stock with the Aim of Hitting $5
For the midweek session’s Trade of the Day, we may have a two-tiered opportunity. First, the immediate target for the optimists is $4. True risk-takers may consider the aforementioned January 2025 $4 call. The contract was cheapened yesterday due to the mixed earnings report. However, LUNR stock seems poised to challenge this level.
Second, the bigger goal is $5. Not only will the bulls be eager to push toward the previous milestone support line, the financials support a higher valuation. Currently, LUNR stock trades at only 0.84x sales, which is low for the aerospace industry, which runs an average multiple of 1.71x. Plus, analysts are projecting gargantuan growth by year’s end: $228.35 million in revenue or 187.2% up from last year.
Of course, nothing in the market is without risk. Given that LUNR stock is a wildly mobile asset, speculators may consider putting a stop-loss at $3.32, which is roughly 10% down from Tuesday’s close.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
