Shares of NuScale Power (NYSE:SMR) have surged over 55% in the past month, propelled by news that the Biden administration would buy $3.4 billion worth of nuclear fuel for American atomic power plants and by reports that the company is finalizing a multi-billion-dollar deal with Standard Power. Early signs look promising, though the company has yet to put any reactors into operation. Despite the recent enthusiasm, NuScale stocks have been highly volatile, so investors may want to hold off until the company can demonstrate further progress.
NuScale Ramps Up
NuScale Power develops and deploys advanced small modular reactor (SMR) technology. The company’s operational scope includes designing, developing, and selling modular light-water reactor nuclear power plants.
The company’s nuclear power plants are versatile, providing energy for various applications, including electrical power generation, district heating, desalination processes, and hydrogen production.
Additionally, NuScale is reportedly closing in on a multi-billion-dollar deal to provide Standard Power, a prominent U.S. information technology infrastructure firm, with 24 small modular reactors (SMRs). The deal is expected to be announced within the coming weeks and to commence in 2029.
NuScale’s Financials & Outlook
The company recently reported Q1 2024 financial results. Revenue of $1.4 million fell below expectations by $4.3 million, while a net loss of $48.1 million marked a stark increase from the $35.6 million loss the previous year. This escalated loss was partly due to a one-time charge of $3.2 million related to the company’s shift from research and development focus to commercial operations and a non-cash adjustment of $9.0 million to the fair value of company shares.
Nonetheless, NuScale has initiated strategic steps to increase its financial stability and steer the company toward commercialization and revenue production. Starting in the second quarter of 2024, these initiatives are forecasted to generate between $50 and $60 million in annual savings.
In addition, NuScale demonstrated an upturn in its cash position, reporting cash and equivalents of $137.1 million, including $5.1 million in restricted funds, at the end of Q1 2024 and no debt. This represents an improvement from the year-end 2023 position of $125.4 million.
Is SMR Stock a Buy?
NuScale Power is rated a Hold based on recommendations and price targets issued by four analysts following the company over the past three months. The average price target for SMR stock is $7.50, representing a -15.45% downside from current levels.
However, opinions on the company are widely divergent. For instance, Iceberg Research has issued a report alleging that NuScale Power has misled investors about the certification status of their reactor and the lack of authentic customer orders. Alternatively, TD Cowen analyst Marc Bianchi has given the company a Buy rating and believes there are opportunities for cash inflows in the near future.
The stock has been highly volatile, even while trending upwards over 169% year-to-date. It currently trades at the upper end of its 52-week price range of $1.81 to $11.21 and continues to show positive momentum, trading above its 20-day (6.83) and 50-day (5.98) moving averages.
SMR in Conclusion
After an impressive surge in stock, which piqued investors’ interest due to promising prospects, it’s clear that NuScale Power is making waves in the energy sector. However, opinions are widely divergent, making SMR a highly volatile stock. Investors attracted to the company may want to wait for further progress toward commercialization before initiating a position.
