CLSA on Friday initiated coverage of shares of NuScale Power Corporation (NYSE:SMR), a leading developer of advanced nuclear reactors, with an Outperform rating and a price target of $11.00.
The company noted that while NuScale is expected to operate at a loss for several years, the company’s prospects are supported by various support mechanisms.
NuScale’s near-term comeback drivers are expected to be sentiment-driven, dependent on regulatory approvals, successful demonstrations of its technology, and increased customer interest. Despite the near-term outlook for operating losses, CLSA pointed to support from parent NuScale Fluor (NYSE: ), the availability of the ATM program, and DOE cost-sharing programs as key factors that could help ease financial pressures until the company is expected to become profitable in 2028.
CLSA’s coverage indicates that NuScale is at the forefront of the advanced nuclear reactor space, with a positive outlook despite the expected initial years of unprofitable operation. The Outperform rating indicates the company’s belief that NuScale can outperform the market average.
The $11.00 price target is based on the company’s current development trajectory and expected industry developments. NuScale’s progress in the coming years, particularly in obtaining necessary regulatory approvals and proving the viability of its reactor designs, will be critical to achieving this target.
Investors and market watchers are likely to be closely watching NuScale’s progress towards achieving the milestones set by CLSA. The company’s journey to profitability by 2028 will be a major story in the energy sector, especially in the context of the increasing global focus on clean and sustainable energy solutions.
InvestingPro Insights
As NuScale Power Corporation (NYSE:SMR) enters its development phase, real-time data from InvestingPro provides an overview of the company’s financial health. With a market cap of $2.15 billion, the company’s valuation reflects investor confidence despite a negative P/E ratio of -7.86, suggesting the market is pricing in future growth potential. InvestingPro’s data shows a massive return of 23.64% over the past week, which is in line with the positive sentiment highlighted by CLSA’s coverage.
InvestingPro’s advice suggests that NuScale is holding more cash than debt on its balance sheet, which is a positive sign for its financial stability as it moves toward profitability. Additionally, the fact that liquid assets exceed short-term liabilities provides further confirmation of the company’s ability to manage its finances in the near term. However, analysts are forecasting lower sales in the current year and do not expect the company to turn a profit during this period. These insights can help investors assess risks and opportunities as they monitor NuScale’s progress toward its 2028 profitability target.
For those seeking deeper analysis, InvestingPro offers additional advice on NuScale Power Corporation’s financial metrics and future prospects, which can be found at InvestingPro.
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