SMR: Deployment Milestones and Major Utility Deals Will Accelerate Industry Expansion

NuScale Power's analyst price target has been reduced from $40.84 to $40.50, as analysts cite delays in deployment timelines and increased working capital needs as reasons for lowering their estimates.

Analyst Commentary

Analysts offered a range of perspectives on NuScale Power's outlook, highlighting both the company's significant opportunities and ongoing execution risks. The following are key points from recent Street research:

Bullish Takeaways

• Bullish analysts view NuScale's agreements to deploy up to 6 gigawatts of new nuclear capacity as a pivotal step that validates its small modular reactor (SMR) technology and unlocks major commercial opportunities.
• NuScale is positioned to benefit from the growing demand for always-on clean power, with nuclear energy expected to see a resurgence in coming years.
• Collaborations with major utilities are seen as a strong foundation for advancing deployment of advanced nuclear technology in the U.S., which could accelerate the company's growth trajectory.
• Positive developments and validation of its technology have prompted upward revisions of price targets by some bullish analysts, reflecting higher confidence in long-term value creation.

Bearish Takeaways

• Bearish analysts continue to express concern about delays in securing firm orders, with deployment timelines for major projects now expected to slip into 2026 or later.
• Some point to the need for significant outside capital to fund NuScale's commitments, particularly if substantial upfront amounts are required as part of new contracts.
• There are doubts regarding the near to medium term likelihood of certain customer contracts materializing, which adds uncertainty to revenue ramp and commercial execution.
• Cautious valuation perspectives mention NuScale's current price relative to risk, as well as challenges to scaling its partnership model that may be underappreciated.

What's in the News

• The U.S. Department of Energy signaled plans to purchase and own as many as 10 large nuclear reactors, supported by a $550 billion investment framework, with up to $80 billion designated for new reactor construction (Bloomberg).
• NuScale Power proposed doubling its authorized Class A common shares from 332 million to 662 million at an upcoming special stockholders' meeting.
• The Board approved an amendment designating the Chief Accounting Officer as an officer of the company and removing the requirement for the Controller to hold that title.
• NuScale filed a follow-on equity offering for $750 million in additional Class A common stock.
• NuScale's strategic partner ENTRA1 Energy may receive up to $25 billion in capital under the U.S.-Japan Framework Agreement to develop new baseload energy plants using NuScale's SMR technology.

Valuation Changes

• Consensus Analyst Price Target has decreased marginally from $40.84 to $40.50 per share, reflecting a minor downward adjustment in fair value estimates.
• Discount Rate has risen slightly from 8.95% to 9.03%, indicating analysts now see a modestly higher perceived risk or cost of capital.
• Revenue Growth projections were reduced, declining from 107.8% to 105.8%. This suggests a modest slowdown in expected top-line expansion.
• Net Profit Margin estimate edged down from 11.35% to 11.33%, implying little change in profitability outlook despite operational updates.
• Future Price-to-Earnings (P/E) ratio has increased from 151.6x to 170.5x, highlighting a higher valuation multiple relative to projected earnings.