Small caps last week: Space stocks rally, 'GLP-1 moment for hair loss', LUNR snubbed

The upcoming IPO of Elon Musk’s SpaceX continues to fuel a rally across the space sector and related companies. Against that backdrop, shares of Intuitive Machines came under pressure after the company was excluded from NASA’s shortlist of contractors that will send robotic landers, rovers, and drones to the Moon as part of the U.S. effort to accelerate the development of a lunar base. Meanwhile, biotech company Absci surged on Thursday after an analyst argued its hair-loss treatment could become as transformative for the market as Ozempic and Wegovy were for diabetes and weight loss. These are the top small-cap stories from May 25-29 in our weekly recap.

Shares of Redwire, a small-cap spacecraft manufacturer and developer of infrastructure solutions for Mars, climbed 40% last week, extending a rally that began the previous week. The company secured a contract with the European Space Agency to develop a prototype robotic arm for a lunar lander designed to unload cargo on the Moon.

The stock was supported by a series of positive developments, including a 58% year-over-year increase in first-quarter revenue to $97 million, a record order book of $498.1 million, and new drone-system contracts – including a high-eight-figure agreement with an undisclosed NATO ally and a follow-on order from the U.S. Army.

Wall Street is upbeat on the stock. It has eight “buy” calls from analysts, versus one “hold” and one “sell” rating. The average target price is $14.40 per share, about 40% below the stock’s current market level.

Oninvest analyst Aldiyar Anuarbekov has included Redwire in his list of top five small caps ahead of the SpaceX IPO. In addition, Oninvest has written about which space stocks led the sector's rally after SpaceX officially filed to go public on May 20.

Shares of biotech company Absci Corporation jumped around 18% on Thursday and extended their gains the following day, rising another 11%. BTIG analyst Kambiz Yazdi wrote that the company’s hair-loss treatment could replicate the success that Ozempic and Wegovy achieved in the diabetes and weight-loss markets. Absci also plans to explore the drug’s potential use in treating endometriosis.

BTIG estimates peak annual sales of the treatment could reach $2.2 billion. “ABS-201 represents a rare and promising asset addressing two large markets where effective treatment options remain limited,” Yazdi wrote in a research note. Around 80 million Americans suffer from hair loss, while the FDA last approved a new hair-loss treatment almost 30 years ago, according to BTIG.

Micro cap Astrotech Corporation – once the first publicly traded company to offer investors exposure to the commercialization of space and now a developer of narcotics-detection and industrial chemical-analysis systems – announced a new strategy focused on building autonomous industrial infrastructure on the Moon. Astrotech shares surged 459% on the Nasdaq on Wednesday to $13.80 per share, a three-year high.

The proposed infrastructure could eventually support semiconductor manufacturing and quantum computing on the lunar surface. Astrotech said the initiative could also support NASA’s Artemis lunar-exploration program, its Commercial Lunar Payload Services initiative, and the development of next-generation commercial lunar transportation systems.

Spacecraft manufacturer Intuitive Machines was not included in NASA’s list of companies selected to send robotic landers, rovers, and drones to the Moon as part of the agency’s accelerated lunar-base initiative, as Bloomberg reported. Shares of the company fell around 9% on the day on Tuesday after rising as much as 16% earlier in the session.

Another NASA contractor, Firefly Aerospace, moved in the opposite direction, gaining 18.8% on Tuesday. The company’s Elytra spacecraft will deliver the first drones intended to survey potential landing sites and future locations for a lunar base.

Investors should consider shares of CleanSpark and Plug Power, two companies operating in the renewable-energy sector, argues Motley Fool analyst Leo Sun. CleanSpark develops data centers powered by its own microgrid systems, helping address concerns about the environmental impact of AI infrastructure. Plug Power develops hydrogen fuel-cell and storage systems. Both companies offer significant long-term growth potential as decarbonization initiatives continue to expand, Sun wrote.

Motley Fool analyst Thomas Niel said investors would be “wise to stay away” from shares of mid-cap biotech Viking Therapeutics. The company remains in the process of developing its obesity treatments, while larger competitors have already advanced further. Wall Street does not share Niel’s pessimism. Viking currently has 15 “buy” calls, two “hold” recommendations, and no “sell” ratings from analysts.

Motley Fool contributor Prosper Junior Bakiny does not recommend investing in Tilray Brands, the Canadian cannabis producer and distributor, the reason being the company’s inconsistent financial performance. Even the easing of cannabis regulation in the U.S. is unlikely to materially improve Tilray’s business prospects, he argues. Wall Street is also cautious on the stock: seven analysts rate it “hold,” while six recommend “buy.”