In recent years, nuclear energy stocks have gained popularity for various reasons. The worldwide shift towards clean energy solutions is bound to drive demand for nuclear power higher in the next two decades.
Right now, 440 nuclear power reactors operate in 32 countries with a combined capacity of 390 (gigawatt-electric). In 2022, these reactors powered around 10% of global electricity demand. Today, more than 60 reactors are under construction, with 110 more in the planning stage. Most of these reactors will be constructed in Asian countries, including India and China.
NuScale Power (SMR) is a company operating in the nuclear energy space that has already surged close to 150% in 2024. Valued at $1.99 billion by market cap, NuScale Power is engaged in the development and sale of modular light water reactor nuclear power plants to supply energy for electrical generation, district heating, hydrogen production, and other process heat applications. Its NuScale Power Module (NPM) is a water reactor that can generate 77 megawatts of electricity (MWe).
Is NuScale Power Stock a Good Buy?
Founded in 2007, NuScale Power went public in 2022, and has been quite volatile since. The stock fell by 69% in 2023 before rebounding spectacularly year-to-date. Today, NuScale Power is largely a speculative bet, given that it has yet to commercialize its technology.
The company currently generates sales from engineering and licensing services, and has emphasized that it is close to commercial deployment. Armed with a debt-free balance sheet, NuScale Power is a high-risk, high-reward investment as it has secured new orders and advanced revenue-generating projects.
Last month, President Joe Biden signed a law banning uranium imports from Russia, driving nuclear energy stocks higher in the process. Uranium is a key ingredient used to power nuclear reactors, and the U.S. government aims to invest $2.7 billion to increase nuclear fuel production.
What is the Target Price for SMR Stock?
Investors are optimistic about NuScale Power’s promising technology, which has multiple use cases. The company also claimed its small modular reactor technology is the only one to be certified by the Nuclear Regulatory Commission in the U.S. This certification should help NuScale widen its customer base at an accelerated pace and gain traction in a rapidly expanding market.
The company recently won a contract from Standard Power to develop two small modular reactor facilities that would generate two gigawatts of clean energy. One gigawatt of energy is sufficient to power 750,000 homes.
NuScale Power is on track to increase revenue from $22.8 million in 2023 to $63 million in 2024 and $132.3 million in 2025. Its losses per share are forecast to narrow from $0.80 per share in 2023 to $0.37 per share in 2025. With $132 million in cash, NuScale can also support its cash burn rate in the near term.
Out of the six analysts covering NuScale stock, four recommend “strong buy,” one recommends “hold,” and one recommends “strong sell.”
The 12-month average target price for SMR stock is $8.90, not too far above Friday's closing price. The Street-high target of $14 implies a premium of nearly 71%.
On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.