Stock Analysis

Things Look Grim For NuScale Power Corporation (NYSE:SMR) After Today's Downgrade

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Today is shaping up negative for NuScale Power Corporation (NYSE:SMR) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

After the downgrade, the four analysts covering NuScale Power are now predicting revenues of US$41m in 2023. If met, this would reflect a huge 131% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 76% to US$0.14 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$88m and losses of US$0.12 per share in 2023. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

See our latest analysis for NuScale Power

NYSE:SMR Earnings and Revenue Growth August 14th 2023

The consensus price target was broadly unchanged at US$13.25, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the NuScale Power's past performance and to peers in the same industry. The analysts are definitely expecting NuScale Power's growth to accelerate, with the forecast 4x annualised growth to the end of 2023 ranking favourably alongside historical growth of 155% per annum over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 7.5% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that NuScale Power is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on NuScale Power after the downgrade.

There might be good reason for analyst bearishness towards NuScale Power, like dilutive stock issuance over the past year. Learn more, and discover the 3 other flags we've identified, for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

Valuation is complex, but we're helping make it simple.

Find out whether NuScale Power is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.


NuScale Power

NuScale Power Corporation engages in the development and sale of modular light water reactor nuclear power plants to supply energy for electrical generation, district heating, desalination, hydrogen production, and other process heat applications.

Excellent balance sheet and slightly overvalued.