Investor optimism for the nuclear energy industry is on the rise, and NuScale Power (SMR) is among those leading the charge. This enthusiasm largely stems from a recent International Energy Agency (IEA) report that underscored the importance of nuclear energy in addressing climate change, particularly the potential of Small Modular Reactors (SMRs). NuScale Power is at the forefront of this innovative technology, being the first to have its SMR design certified by the U.S. Nuclear Regulatory Commission. Further, President Trump’s early executive orders indicate a clear intent to support traditional and nuclear energy sources, driving up investor interest in NuScale Power. As of this writing, the company’s stock is up 44% year to date. Investors interested in the next generation of nuclear power might find this a compelling opportunity.
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A New Friend in Washington
NuScale Power Corporation is an energy tech firm that creates small modular reactors (SMRs) for nuclear energy production. The company’s SMR technology is developed around condensed reactor modules, each capable of producing 77 megawatts of electricity. Furthermore, these reactors are fitted with advanced safety components. They are versatile and support a range of applications, not only limited to electricity generation but also industrial processing and water desalination.
Nuclear energy has experienced a significant increase in interest, primarily attributed to the growing anticipation of increased energy requirements to sustain the expanding data centers necessary for AI support. Additionally, President Donald Trump’s recent disclosure of a substantial $500 billion joint venture involving Oracle (ORCL), OpenAI, and SoftBank (SFTBY) for the construction of AI infrastructure has further bolstered expectations of a rise in energy demand for AI.
The recently appointed U.S. Energy Secretary, Chris Wright, has indicated the new administration is prioritizing expanding commercial nuclear power as part of America’s energy strategy. Wright intends to leverage the Department of Energy’s significant resources for research and development and loans to promote innovation. Among the priorities he listed include fostering affordable, reliable, and secure energy technologies, with an emphasis on advanced nuclear power.
Secretary Wright’s approach aligns with President Trump’s executive orders advocating for U.S. energy dominance. As part of these efforts, Wright has emphasized the need for regulatory streamlining and permitting reform to encourage private sector investment and speed up the construction of new energy projects.
Increasing Operating Efficiency
For the third quarter of 2024, NuScale reported significant financial progress. Despite a decrease in revenue from $7.0 million to $0.5 million compared to the same period in the prior year, the net loss was reduced from $58.3 million to $45.5 million.
Further, the company successfully reduced its operating expenses from $93.9 million to $41.2 million as part of its focus on operating more efficiently and cutting costs. Consequently, the operating loss decreased from $92.9 million to $41.0 million, demonstrating the efficacy of these cost-reduction strategies.
As of the quarter’s end, the company reported cash, cash equivalents, and short-term investments of $161.7 million, an increase from $136.0 million at the end of Q2 2024. Notably, the company holds no debt. The company’s cash balance provides NuScale with a multi-year cash runway.
Analysts are Bullish on the Stock
The stock has been on a remarkable upward trend since January 2024, climbing over 800% in the past year. It trades in the upper quartile of its 52-week price range of $2.46 – $32.30 and shows ongoing positive price momentum as it trades above major moving averages.
Analysts following the company have been bullish on the stock. For instance, B. Riley analyst Ryan Pfingst recently reiterated a Buy rating and raised the price target on the shares to $28 (from $14), noting that NuScale does not provide insight into its customer pipeline, however, ENTRA1, its exclusive commercialization partner, has shared it is delivering on a ~30 GW SMR project pipeline.
NuScale Power is rated a Strong Buy overall, based on the recent recommendations of three analysts. The average price target for SMR stock over the next 12 months is $27.00, which represents a potential upside of 4.49% from current levels.
SMR in Summary
NuScale Power is riding the surging wave of interest in nuclear energy. Its pioneering Small Modular Reactors (SMRs) offer a promising solution to addressing climate change and satisfying the expanding energy demands of artificial intelligence infrastructure. Further affirming this potential is the U.S. government’s demonstrated commitment to nuclear power. NuScale’s significant financial strides in the third quarter of 2024, robust cash position, and stock performance have also raised investor confidence. Investors interested in the next phase of nuclear energy may find investing in SMR a uniquely enticing prospect.
