Key Takeaways
- UBS slashed NuScale Power (SMR) rating from Neutral to Sell, lowering the price target from $10 down to $6
- Shares tumbled approximately 9.4% following the downgrade after a recent speculative surge linked to artificial intelligence power requirements
- UBS analyst Jon Windham highlighted NuScale’s lengthy construction schedule and absence of binding customer agreements
- The firm anticipates approximately $700 million in total cash burn spanning 2026 to 2028, with profitability not expected until after 2030
- Additional worries include minimal advancement with the Tennessee Valley Authority and complications with the RoPower initiative
Shares of NuScale Power (SMR) suffered a steep decline on Friday after UBS slashed its rating to Sell from Neutral and reduced the price target to $6 from $10. The stock declined 4.4% during premarket hours after the announcement and plummeted as much as 9.4% during regular trading.
NuScale Power Corporation, SMR
The rating cut follows a recent rally in SMR shares earlier in the week, fueled by speculative momentum surrounding power infrastructure needs for artificial intelligence applications. Investors began taking profits as underlying business concerns came back into focus.
Jon Windham, analyst at UBS, highlighted NuScale’s lengthy development cycle of five years or longer as a critical concern. He emphasized that rival companies are already advancing to the construction phase while NuScale continues seeking definitive customer agreements.
Windham’s primary scenario assumes just a single NuScale facility breaking ground in 2028. This represents a substantially more cautious outlook than what the company’s current stock valuation seems to imply.
Projected Losses and Revenue Trajectory
UBS forecasts total cash depletion of approximately $700 million from 2026 through 2028. Revenue is anticipated to climb from $185 million in 2028 to $924 million by 2030, representing a compound annual growth rate of 123%.
Even with that aggressive revenue expansion, the company isn’t projected to achieve profitability until after 2030. UBS calculates that the market is currently embedding $124 million in 2028 EBITDA expectations, while the firm’s own estimate sits at merely $29 million.
This substantial disconnect between market assumptions and UBS’s projections forms the foundation of the Sell rating. The revised $6 target price suggests potential downside of approximately 40% from present trading levels.
Windham additionally cited slow progress in discussions with the Tennessee Valley Authority and challenges facing the RoPower initiative as factors that could further amplify the disconnect between investor hopes and operational execution.
Market Pricing Outpacing Business Development
The stock decline also mirrors growing investor anxiety that NuScale’s market valuation has outpaced its business fundamentals. The company currently generates minimal revenue and lacks any binding power purchase agreements.
NuScale does possess regulatory approval and has completed substantial design development, which may provide competitive benefits when electric utilities and data center companies begin selecting small modular reactor vendors.
However, the investment thesis currently hinges on securing significant contracts and obtaining project financing. Any postponements in converting its technology platform into revenue-generating projects may intensify downward pressure on shares.
For the year, SMR has declined 23.71%. The stock maintains average daily trading volume around 32 million shares, with technical indicators currently signaling Sell.
The company’s market capitalization currently stands at roughly $4.8 billion.
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