Last Update04 Sep 25Fair value Increased 3.85%
NuScale Power's analyst price target has risen to $42.30, reflecting increased confidence driven by a major 6GW SMR capacity collaboration with TVA/ENTRA1, upwardly revised deployment and revenue assumptions, and positive sector tailwinds, though ongoing execution risks and valuation concerns remain.
Analyst Commentary
- NuScale secured the largest ever U.S. small modular reactor (SMR) capacity commitment through a collaboration with the Tennessee Valley Authority and ENTRA1 Energy for up to 6GW, validating its technology and providing significant commercial momentum.
- Bullish analysts raised price targets based on increased confidence in long-term module deployments, the commercial potential of the TVA/ENTRA1 partnership, and upward revisions to deployment and revenue estimates.
- Bearish analysts remain cautious, citing the early stage of commercialization, absence of binding contracts, and significant execution risks relative to the stock’s already high valuation.
- The competitive landscape is intensifying, with key questions surrounding whether SMRs can achieve cost competitiveness and if NuScale can transition credibility from design approvals to firm customer demand.
- Positive sector-wide structural and policy shifts favor nuclear energy, but uncertainties over project execution, scaling supply chains, and future customer traction continue to temper more bullish sentiment.
What's in the News
- NuScale Power is supporting ENTRA1 Energy’s agreement with the Tennessee Valley Authority (TVA) to deploy up to 6 GW of NuScale SMR capacity across seven states, marking the largest SMR deployment program in U.S. history and strengthening U.S. energy security.
- NuScale filed a $500 million at-the-market follow-on equity offering of Class A common stock.
- GSE Solutions and NuScale developed a hydrogen fuel cell generation and storage plant simulation model for dynamic evaluation and optimization of integrated energy systems, positioning NuScale as the first SMR company to integrate hydrogen production into its control room simulator.
- Paragon Energy Solutions entered a strategic agreement with NuScale to supply its CoreVision Neutron Monitoring System and Highly Integrated Protection System (HIPS) for future SMR deployments, enhancing instrumentation and control safety.
- NuScale launched research programs focused on an integrated energy system for clean water and hydrogen production, including a novel method to use desalination brine as industrial feedstock and deploying advanced simulation for large-scale hydrogen production.
Valuation Changes
Summary of Valuation Changes for NuScale Power
- The Consensus Analyst Price Target has risen slightly from $40.73 to $42.30.
- The Future P/E for NuScale Power has significantly fallen from 196.67x to 162.92x.
- The Consensus Revenue Growth forecasts for NuScale Power has risen from 104.1% per annum to 112.2% per annum.
Key Takeaways
- NuScale's advanced SMR commercialization and partnerships position it well for accelerated revenue growth and immediate deployment in competitive energy markets.
- Efficiency improvements and strategic focus on reducing expenses are expected to enhance profitability and support margin expansion.
- Challenges in securing agreements, funding uncertainties, and potential supply chain issues threaten cash flow, earnings, and profitability, despite project advancements.
Catalysts
About NuScale Power- Provides small modular reactor technology solutions.
- NuScale's involvement in the RoPower 6-module small modular reactor (SMR) power plant in Romania indicates future meaningful revenue and cash flow through its partnership in the Fluor-led Front-End Engineering and Design (FEED) Phase 2. This project enhances NuScale's revenue prospects.
- With an NRC-approved SMR technology and the commitment of over $2 billion towards its development and licensing, NuScale is uniquely positioned for immediate commercial deployment compared to competitors focused solely on demonstration plans. This potentially accelerates revenue growth once commercial operations commence.
- NuScale is advancing the manufacturing of long-lead materials for 12 modules, anticipating customer demand, which supports a smooth production ramp-up, reducing delivery times significantly, and potentially boosting future revenue and earnings.
- Significant demand for nuclear energy, especially from AI-driven data centers like Microsoft and Meta, could lead to increased interest and order placements for NuScale’s SMR technology. This could materially increase future revenues as data centers triple their energy use by 2028.
- NuScale's focus on reducing operating expenses, as noted by the substantial year-over-year decrease, could lead to improved net margins. Efficiency improvements transitioning from R&D to commercialization are likely to enhance profitability and support margin expansion.
NuScale Power Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming NuScale Power's revenue will grow by 121.5% annually over the next 3 years.
- Analysts are not forecasting that NuScale Power will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate NuScale Power's profit margin will increase from -368.8% to the average US Electrical industry of 10.5% in 3 years.
- If NuScale Power's profit margin were to converge on the industry average, you could expect earnings to reach $42.2 million (and earnings per share of $0.12) by about April 2028, up from $-136.6 million today.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 248.0x on those 2028 earnings, up from -13.0x today. This future PE is greater than the current PE for the US Electrical industry at 19.7x.
- Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 7.48%, as per the Simply Wall St company report.
NuScale Power Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- The complexity and negotiation challenges of securing long-term power purchase agreements with prospective customers could delay revenue generation and impact cash flow projections.
- The U.S. government grant-related uncertainties and the administrative process of securing additional funding highlight a possible risk to future liquidity and investment inflow, potentially affecting financial stability and development timelines.
- Potential bottlenecks in the supply chain or manufacturing process for the small modular reactors, despite current advancements, could lead to increased operational costs and affect net margins.
- The dependence on the successful commercialization of ENTRA1 Energy projects and the potential delays in customer acquisition for NuScale's long-lead modules pose a risk to revenue forecasts and earnings projections.
- The ongoing regulatory approval process with the NRC for the power upgrade and overall project complexity may result in unanticipated expenses or timeline shifts, impacting future earnings and profitability.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $24.46 for NuScale Power based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $29.0, and the most bearish reporting a price target of just $17.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $402.3 million, earnings will come to $42.2 million, and it would be trading on a PE ratio of 248.0x, assuming you use a discount rate of 7.5%.
- Given the current share price of $13.91, the analyst price target of $24.46 is 43.1% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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