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On Friday, BTIG analysts initiated coverage on Nuscale Power (NYSE:SMR), a company specializing in small modular reactors (SMRs), with a positive outlook. The firm bestowed a Buy rating on the stock and set a price target of $20.00, below the current trading price of $22.72. According to InvestingPro data, analyst consensus remains bullish with price targets ranging from $30 to $65, suggesting significant upside potential. The initiation comes amid a broader reassessment of nuclear power's role in the global energy transition.
The analysts highlighted the historical challenges faced by nuclear power, including high initial costs, opposition from anti-nuclear groups, regulatory hurdles, and the dominance of hydrocarbons due to their lower costs and easier access. These factors contributed to the stagnation of U.S. nuclear power capacity over the past two decades. With a market capitalization of $3.16 billion, Nuscale Power represents a new generation of nuclear technology companies. InvestingPro analysis indicates the company maintains strong financial health with a current ratio of 43.47, suggesting robust liquidity to fund its development plans.
Despite these challenges, BTIG analysts noted several developments that are now propelling a nuclear renaissance. The rise of renewable energy sources has underscored the need for stable baseload power to counteract their intermittent nature. Additionally, the push for lower carbon emissions has cast nuclear energy in a favorable light due to its zero-carbon footprint.
The report pointed out that while traditional nuclear power may see slow growth in the U.S., with commercial SMRs not expected until at least 2028, these modern reactors could significantly contribute to the energy mix. SMRs are designed to provide flexible on/off-grid solutions and are expected to reach the market faster than conventional nuclear plants. Their suitability for meeting power demands ranging from 50 to 200 megawatts, as opposed to the gigawatt scale of traditional reactors, positions them as a viable option for the evolving needs of power grids.
The BTIG analysts underscored the expected increase in electricity demand driven by data centers and the transportation sector, particularly electric vehicles, as a key factor in nuclear power's resurgence. They believe that SMRs will play a critical role in the ongoing energy transition, offering a cleaner and more adaptable alternative to traditional power sources. While the company is not yet profitable, with analysts forecasting a loss for FY2025, InvestingPro subscribers can access 12 additional exclusive tips and comprehensive analysis through the Pro Research Report, helping investors make informed decisions about this emerging clean energy player.
In other recent news, Oklo Inc. reported its fourth-quarter 2024 earnings, revealing a slight miss in expected earnings per share, with an actual EPS of -0.07 compared to the forecast of -0.0665. This financial result contributed to a full-year operating loss of $52.8 million. Despite the financial challenges, Oklo continues to focus on its strategic initiatives, including the expansion of its Powerhouse reactor design to 75 megawatts and the acquisition of Atomic Alchemy, marking its entry into the radioisotope market. Additionally, Oklo was named among the companies eligible to supply microreactor power systems to the U.S. Department of Defense under the Advanced Nuclear Power for Installations program.
Analyst firm Citi recently adjusted the price target for Oklo shares to $30.00 from $31.00, maintaining a Neutral rating. The adjustment reflects a "Modestly Negative" outlook due to Oklo's introduction of a new 75MW reactor design, which requires higher initial capital expenditures. BTIG also initiated coverage on Oklo with a Neutral rating, highlighting the company's potential to supply stable, non-carbon power but noting the commercial solution is still years away and dependent on regulatory approval.
In a significant development, Oklo secured a 12-gigawatt agreement with Switch (NYSE:SWCH), indicating a growing demand for their nuclear solutions. However, the company's recent earnings call was criticized for lacking concrete financial progress, leading financial analyst Herb Greenberg to add Oklo to his Red Flag Focus List, expressing concerns about the company's valuation and future prospects. These developments underscore the challenges and opportunities Oklo faces in the competitive nuclear sector.
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