NuScale Power Shares Plummet After Downgrade by TD Cowen
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 4 days ago
0mins
Should l Buy SMR?
Source: Fool
- Downgrade Impact: TD Cowen analyst Marc Bianchi downgraded NuScale Power's stock from buy to hold, resulting in a 9.3% drop in share price on Wednesday morning, reflecting market concerns about the company's future prospects.
- Risk Transfer: Bianchi anticipates that NuScale's customer Nuclearelectrica will make a Final Investment Decision on its Doicesti small modular reactor project this week, but may shift some project risks to NuScale and delay completion to 2033 or 2034, significantly impacting NuScale's revenue growth and profitability.
- Market Confidence Erosion: The potential delay of the Nuclearelectrica project could lead other nuclear utilities to use it as a test case, which may undermine their confidence in NuScale's commercial potential, negatively affecting future orders for the company.
- Profit Expectations Delayed: Analysts generally expect NuScale to achieve its first profit in 2030, but if the Doicesti project's opening is delayed by three to four years, NuScale's profit timeline will also be affected, increasing uncertainty for investors.
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Analyst Views on SMR
Wall Street analysts forecast SMR stock price to rise
13 Analyst Rating
5 Buy
6 Hold
2 Sell
Hold
Current: 13.990
Low
18.50
Averages
32.77
High
60.00
Current: 13.990
Low
18.50
Averages
32.77
High
60.00
About SMR
NuScale Power Corporation is a provider of proprietary advanced small modular reactor nuclear technology. The NuScale Power Module, the Company's SMR technology, is a small pressurized water reactor that can generate 77 megawatts of electricity (MWe) or 250 megawatts thermal (gross) and can be scaled to meet customer needs through an array of flexible configurations of up to 924 MWe (12 modules) of output. In addition to the sale of NPMs, it offers a diversified suite of services throughout the development and operating life of the power plant. The Company's suite of services is planned to include licensing support, testing, training, fuel supply services and program management, among others. It serves a range of customers consisting of governments, political subdivisions, state-owned enterprises, investor-owned utilities and other technology and industrial companies, both in domestic and international markets.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
NuScale Power Advances in Small Modular Reactor Design
- Technological Potential: NuScale Power focuses on designing small modular reactors (SMRs), which, despite not being commercially deployed yet, have the potential to meet the 24/7 electricity demands of data centers, particularly in applications related to artificial intelligence.
- Financial Condition: The company currently has a market cap of $4.5 billion, while its trailing twelve-month revenue stands at only $64 million, resulting in a price-to-sales ratio exceeding 70, indicating a high valuation by conventional standards, warranting caution from investors.
- Market Competition: Although NuScale is the only U.S. company with an NRC-approved SMR design, it faces competition from emerging nuclear startups like Oklo and Nano Nuclear Energy, which are also vying to become the primary power source for artificial intelligence.
- Investment Risks: Given NuScale's current cash burn and losses, investors considering a $500 investment should be prepared for volatility, even though the company holds long-term potential to meet surging electricity demands.
See More
NuScale Power Faces Significant Challenges Ahead
- Stock Volatility: NuScale Power's stock has plummeted 70% from last year's peak of $57, currently trading at $14.29, reflecting the volatility and investment risks associated with the nuclear energy sector, necessitating cautious evaluation by investors.
- Slow Project Progress: Although NuScale's RoPower project in Romania has received a Final Investment Decision, the operational timeline has been pushed back to 2033 due to the need for pilot testing, impacting the company's long-term revenue expectations.
- Uncertain Partnership Agreements: The non-binding memorandum of understanding with the Tennessee Valley Authority offers a potential 6GW development opportunity, but the lack of firm commitments has led to a $495 million financial burden recorded in Q3, increasing operational risks for the company.
- Manufacturing Capability Needs: NuScale must establish a manufacturing supply chain to produce its modules at scale, which will require billions in capital investment, and the financial demands prior to commercial operations will exert pressure on the company's financial health.
See More
NuScale Power Faces Supply Chain Challenges Amid Nuclear Energy Resurgence
- Significant Stock Volatility: NuScale Power's stock has experienced substantial fluctuations amid a nuclear energy resurgence, peaking at $57 per share last year but currently down 70%, reflecting market uncertainty regarding its future profitability and necessitating cautious risk assessment by investors.
- Slow Project Progress: Although NuScale's RoPower project in Romania has received a Final Investment Decision (FID), the facility is not expected to be operational until at least July 2033 due to the need for pilot reactor testing, pushing back the original 2030 timeline and impacting market confidence in the company.
- Massive Capital Requirements: NuScale must establish a manufacturing supply chain to produce its NuScale Power Modules at scale, with management indicating that total payments for large projects could exceed billions of dollars, placing financial strain on the company, especially without securing sufficient contracts.
- Intensifying Competition: NuScale faces competition from emerging players like Oklo and established rivals such as GE Vernova, whose GE Hitachi BWRX-300 has been selected by the Tennessee Valley Authority, highlighting the challenges NuScale faces in technology deployment and market share acquisition.
See More
NuScale Power Faces Significant Challenges Ahead
- Stock Volatility: NuScale Power's stock peaked at $57 last year but has since fallen 70%, indicating significant uncertainty and investment risk in the nuclear energy sector, prompting investors to carefully assess future performance.
- Slow Project Progress: Although NuScale's RoPower project in Romania has received a Final Investment Decision (FID), the facility is not expected to be operational until at least July 2033 due to trial delays, which will impact the company's long-term revenue expectations.
- Contract Signing Challenges: The Memorandum of Understanding (MOU) with the Tennessee Valley Authority (TVA) for potential 6GW capacity development lacks formal contracts, leading to a financial burden of $495 million for the company, increasing operational risks.
- Manufacturing Capability Needs: To achieve scalable production, NuScale must establish a manufacturing supply chain, with management noting that total payments for large projects could exceed billions of dollars, putting pressure on the company's liquidity and financial stability.
See More
NuScale Power Innovates with Small Modular Reactors
- Small Modular Reactor Design: NuScale Power focuses on developing small modular reactors aimed at reducing construction costs through factory production, although commercial deployment has yet to be realized, indicating the potential value of its technology.
- Market Demand Opportunity: The increasing demand for 24/7 electricity from data centers positions small modular reactors (SMRs) as a viable solution, with NuScale leading the U.S. market as a potential power supplier for high-energy sectors like AI.
- Financial Condition Challenges: Despite a market cap of $4.5 billion, NuScale's trailing 12-month revenue stands at only $64 million, resulting in a price-to-sales ratio exceeding 70, highlighting significant challenges in profitability.
- Investment Risk Advisory: For investors willing to endure volatility, NuScale may represent a long-term growth opportunity, but the company must demonstrate its ability to convert designs into actual projects, necessitating careful risk-reward assessment.
See More
NuScale Power Partners with Oak Ridge to Optimize Nuclear Fuel Management
- Partnership Announcement: NuScale Power has partnered with Oak Ridge National Laboratory to leverage an AI-enabled nuclear design framework aimed at optimizing fuel management across multiple reactors at a single site, which is expected to enhance overall fuel efficiency.
- Funding Support: This collaboration is funded by the U.S. Department of Energy’s Gateway for Accelerated Innovation in Nuclear initiative, indicating government support for nuclear innovation, which may provide NuScale with additional R&D resources.
- Modular Reactor Configuration: The project will focus on a 12-module reactor configuration, and by sharing fuel across modules, NuScale aims to achieve fuel efficiencies that surpass those of a single reactor, potentially reducing operational costs.
- Strategic Implications: NuScale CEO John Hopkins stated that this collaboration will open up new opportunities for future nuclear fuel management, further reducing costs and enhancing the company's competitiveness in the nuclear energy market.
See More
NuScale Power Advances in Small Modular Reactor Design
- Technological Potential: NuScale Power focuses on designing small modular reactors (SMRs), which, despite not being commercially deployed yet, have the potential to meet the 24/7 electricity demands of data centers, particularly in applications related to artificial intelligence.
- Financial Condition: The company currently has a market cap of $4.5 billion, while its trailing twelve-month revenue stands at only $64 million, resulting in a price-to-sales ratio exceeding 70, indicating a high valuation by conventional standards, warranting caution from investors.
- Market Competition: Although NuScale is the only U.S. company with an NRC-approved SMR design, it faces competition from emerging nuclear startups like Oklo and Nano Nuclear Energy, which are also vying to become the primary power source for artificial intelligence.
- Investment Risks: Given NuScale's current cash burn and losses, investors considering a $500 investment should be prepared for volatility, even though the company holds long-term potential to meet surging electricity demands.
See More
NuScale Power Faces Significant Challenges Ahead
- Stock Volatility: NuScale Power's stock has plummeted 70% from last year's peak of $57, currently trading at $14.29, reflecting the volatility and investment risks associated with the nuclear energy sector, necessitating cautious evaluation by investors.
- Slow Project Progress: Although NuScale's RoPower project in Romania has received a Final Investment Decision, the operational timeline has been pushed back to 2033 due to the need for pilot testing, impacting the company's long-term revenue expectations.
- Uncertain Partnership Agreements: The non-binding memorandum of understanding with the Tennessee Valley Authority offers a potential 6GW development opportunity, but the lack of firm commitments has led to a $495 million financial burden recorded in Q3, increasing operational risks for the company.
- Manufacturing Capability Needs: NuScale must establish a manufacturing supply chain to produce its modules at scale, which will require billions in capital investment, and the financial demands prior to commercial operations will exert pressure on the company's financial health.
See More
NuScale Power Faces Supply Chain Challenges Amid Nuclear Energy Resurgence
- Significant Stock Volatility: NuScale Power's stock has experienced substantial fluctuations amid a nuclear energy resurgence, peaking at $57 per share last year but currently down 70%, reflecting market uncertainty regarding its future profitability and necessitating cautious risk assessment by investors.
- Slow Project Progress: Although NuScale's RoPower project in Romania has received a Final Investment Decision (FID), the facility is not expected to be operational until at least July 2033 due to the need for pilot reactor testing, pushing back the original 2030 timeline and impacting market confidence in the company.
- Massive Capital Requirements: NuScale must establish a manufacturing supply chain to produce its NuScale Power Modules at scale, with management indicating that total payments for large projects could exceed billions of dollars, placing financial strain on the company, especially without securing sufficient contracts.
- Intensifying Competition: NuScale faces competition from emerging players like Oklo and established rivals such as GE Vernova, whose GE Hitachi BWRX-300 has been selected by the Tennessee Valley Authority, highlighting the challenges NuScale faces in technology deployment and market share acquisition.
See More
NuScale Power Faces Significant Challenges Ahead
- Stock Volatility: NuScale Power's stock peaked at $57 last year but has since fallen 70%, indicating significant uncertainty and investment risk in the nuclear energy sector, prompting investors to carefully assess future performance.
- Slow Project Progress: Although NuScale's RoPower project in Romania has received a Final Investment Decision (FID), the facility is not expected to be operational until at least July 2033 due to trial delays, which will impact the company's long-term revenue expectations.
- Contract Signing Challenges: The Memorandum of Understanding (MOU) with the Tennessee Valley Authority (TVA) for potential 6GW capacity development lacks formal contracts, leading to a financial burden of $495 million for the company, increasing operational risks.
- Manufacturing Capability Needs: To achieve scalable production, NuScale must establish a manufacturing supply chain, with management noting that total payments for large projects could exceed billions of dollars, putting pressure on the company's liquidity and financial stability.
See More
NuScale Power Innovates with Small Modular Reactors
- Small Modular Reactor Design: NuScale Power focuses on developing small modular reactors aimed at reducing construction costs through factory production, although commercial deployment has yet to be realized, indicating the potential value of its technology.
- Market Demand Opportunity: The increasing demand for 24/7 electricity from data centers positions small modular reactors (SMRs) as a viable solution, with NuScale leading the U.S. market as a potential power supplier for high-energy sectors like AI.
- Financial Condition Challenges: Despite a market cap of $4.5 billion, NuScale's trailing 12-month revenue stands at only $64 million, resulting in a price-to-sales ratio exceeding 70, highlighting significant challenges in profitability.
- Investment Risk Advisory: For investors willing to endure volatility, NuScale may represent a long-term growth opportunity, but the company must demonstrate its ability to convert designs into actual projects, necessitating careful risk-reward assessment.
See More
NuScale Power Partners with Oak Ridge to Optimize Nuclear Fuel Management
- Partnership Announcement: NuScale Power has partnered with Oak Ridge National Laboratory to leverage an AI-enabled nuclear design framework aimed at optimizing fuel management across multiple reactors at a single site, which is expected to enhance overall fuel efficiency.
- Funding Support: This collaboration is funded by the U.S. Department of Energy’s Gateway for Accelerated Innovation in Nuclear initiative, indicating government support for nuclear innovation, which may provide NuScale with additional R&D resources.
- Modular Reactor Configuration: The project will focus on a 12-module reactor configuration, and by sharing fuel across modules, NuScale aims to achieve fuel efficiencies that surpass those of a single reactor, potentially reducing operational costs.
- Strategic Implications: NuScale CEO John Hopkins stated that this collaboration will open up new opportunities for future nuclear fuel management, further reducing costs and enhancing the company's competitiveness in the nuclear energy market.
See More
