Analysts Weigh NuScale Power Valuation Amid SMR Milestones and Revised Price Targets

NuScale Power's analyst price target has decreased from approximately $41.69 to $40.84, as analysts cite ongoing valuation concerns and increased uncertainty around key contract milestones. This comes despite positive developments in the company's pipeline.

Analyst Commentary

Recent commentary on NuScale Power reflects a balance of optimism about the company’s position in the emerging small modular reactor (SMR) market and ongoing caution regarding near-term execution and financial risks. Analysts are updating their perspectives as NuScale secures significant partnerships but still faces notable challenges that impact their outlook on valuation and growth.

Bullish Takeaways

• New collaborations with major utilities and energy firms have resulted in the largest SMR power commitment in U.S. history. This has the potential to supply power to millions of homes, highlighting NuScale's technology validation and commercial potential.
• Bullish analysts view the growing demand for always-on clean power as an important long-term growth driver and consider NuScale well positioned to capitalize on the resurgence in nuclear energy.
• Recent upgrades to price targets reflect increased confidence in the company's pipeline and improved prospects for advanced nuclear technology deployment. This is being driven by active partnerships and supportive policy environments.
• Estimates are being raised based on expectations that binding agreements and scalability could further accelerate growth and allow NuScale to capture a meaningful share of the U.S. SMR opportunity, which is sized at hundreds of gigawatts by 2050.

Bearish Takeaways

• Bearish analysts remain wary of the company's valuation, noting it already prices in significant future success despite the early stage of commercialization and limited binding contracts.
• Key project milestones and the likelihood of near-term agreements, including with certain utilities, are seen as uncertain. This has led to cautious and in some cases downgraded ratings.
• There are concerns over the need for substantial additional capital, including potential sizable payments to partners, which could result in further dilution or financial risk if outside funding is required.
• Skepticism persists regarding scalability and execution of the partnership model. There is a desire for further proof that commercial deployment can move from design approval to sustained customer adoption.

What's in the News

• NuScale Power is supporting ENTRA1 Energy’s agreement with the Tennessee Valley Authority to deploy up to 6 gigawatts of SMR capacity across seven states. This represents the largest SMR deployment program in U.S. history (Key Developments).
• This SMR deployment is expected to power the equivalent of the entire Dallas-Fort Worth area, targeting growing demand from datacenters, artificial intelligence, semiconductor manufacturing, and other critical infrastructure sectors (Key Developments).
• NuScale remains the first and only U.S. NRC-approved SMR technology ready for commercial deployment, further validated by its role in the ENTRA1-TVA partnership (Key Developments).
• The company and ENTRA1 have entered into a Partnership Milestones Agreement, facilitating up to $55 million in NuScale technology contributions for future projects. These contributions will be distributed as project milestones are met (Key Developments).
• NuScale Power has filed a $500 million follow-on equity offering, issuing Class A Common Stock through an at-the-market transaction (Key Developments).

Valuation Changes

• Consensus Analyst Price Target has decreased slightly from $41.69 to $40.84, reflecting updated market perspectives.
• Discount Rate has risen modestly from 8.67% to 8.90%, indicating analysts are accounting for slightly higher perceived risk.
• Revenue Growth projections have edged up from 105.40% to 107.59%, which suggests expectations for stronger top-line expansion.
• Net Profit Margin estimates have improved from 10.25% to 10.56%, which hints at anticipated operational efficiencies or profitability gains.
• Future P/E ratio has declined from 176.09x to 163.14x, which signals increased earnings expectations relative to share price.