Updated Aug 6 at 1:58pm ET.
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Northland Securities lowered its price target for NuScale to $16, down from $19. This follows a quarter where the company reported no revenue as it continues to work through the long process of getting its first small modular reactors approved and built.
Even with the cut, the new target is still well above the current stock price of about $9.50. This suggests the firm still sees a lot of potential value in the technology, but is being more cautious about how quickly that value will turn into actual cash flow.
Source: Northland Securities
NuScale signed a deal with Curio and Framatome to work on the nuclear fuel cycle, which covers everything from making fuel to recycling it after use. Finding reliable ways to handle fuel is a major hurdle for the next generation of small nuclear reactors.
While this is just an early-stage agreement to evaluate solutions, it shows NuScale is trying to solve the supply chain issues that often slow down new nuclear projects. For a company still working to get its first reactors built, securing these technical partnerships is a necessary step toward proving the business can actually scale.
Source: Business Wire
NuScale reported zero revenue for the quarter, which is expected for a company in the early stages of launching a new type of nuclear power plant. It lost about 13 cents per share, which was roughly what analysts expected. The company is currently living off its cash reserves, which stood at a healthy $1.9 billion at the end of June.
The real story is in the project pipeline. NuScale is in talks for a major power deal with the Tennessee Valley Authority and is working on a project in Romania to replace a coal plant with six of its small reactors. Because these projects take years to approve and build, the stock will likely move based on these partnership milestones rather than quarterly sales for a long time.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Barclays lowered its price target for NuScale to $11, down from $15. The firm kept its rating at Equal Weight, which is a way of saying they expect the stock to perform about the same as the rest of the market.
This target cut reflects the high risks and long timelines involved in the nuclear industry. While NuScale has a first-mover advantage in small modular reactors, analysts are being more conservative about how much that advantage is worth before the first commercial units are actually running.
Source: Barclays
The Department of Energy officially launched the Nuclear Fuel Cycle Consortium. This group is designed to help secure the supply of fuel needed for nuclear reactors, which has become a major concern for the industry as it tries to move away from Russian supplies. For NuScale, a stable domestic fuel supply is critical. If the industry cannot guarantee fuel for these new reactors, customers will be hesitant to sign long-term contracts. This government-backed effort helps lower that specific risk for the entire sector.
Analysts recently lowered their price targets following the company's disappointing second-quarter earnings report. Most analysts remain split, with 8 of 16 rating the stock a buy, and the average target of $13 suggests 39% upside from today's price.
The company often reports almost no revenue and losses that match expectations, as it is still in the early stages of building its technology. Management is meeting its goal of keeping plenty of cash on hand.
| Expectation | |
|---|---|
| EPS | $-0.13 |
| Revenue | $11M |
Business Wire · Press release · Aug 6
Seeking Alpha · Opinion · Aug 5
Business Wire · Press release · Aug 5
Seeking Alpha · Opinion · Aug 5
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