Amazon-Backed X-Energy Is Down 8% Post IPO — Why Does Wall Street See Massive Upside?

• Guggenheim initiated coverage of X-Energy with a ‘Buy’ rating and $57 price target, as per TheFly.
• The analyst said it views the company as a "pure-play leader" in next-generation nuclear technology.
• Meanwhile, Wolfe Research analyst Steve Fleishman said the firm prefers X-Energy to rival Oklo Inc. due to its lower-risk business model and Amazon's support.

Nuclear reactor developer X-Energy Inc. (XE) has garnered significant attention on Wall Street about a month after its successful initial public offering, despite being down more than 8% from its opening price.

At least eight analysts have initiated coverage on the small modular reactor (SMR) manufacturer, with some seeing an upside of up to 112% from its last closing price.

XE’s Long-Term Potential

Guggenheim initiated coverage of X-Energy with a ‘Buy’ rating and $57 price target, indicating an upside of about 112.85% from its last close. The analyst said that it views the company as a "pure-play leader" in the next generation of nuclear technology, according to TheFly.

Guggenheim also said the company "stands out" for its "industry-leading" contracted backlog, proprietary TRISO-X fuel technology that is meltdown-proof by design, and a capital-efficient licensing model that generates revenue without owning or operating facilities.

Morgan Stanley analyst David Arcaro also initiated coverage of the company with an ‘Overweight’ rating and $41 price target. The analyst said it expects the company to deploy 20 gigawatts of energy by 2040, supported by its "strong" technology proposition, capital-light business model, and excellent partnerships.

Analyst Picks Superior Stock

Meanwhile, Wolfe Research analyst Steve Fleishman initiated coverage of X-Energy with a ‘Peer Perform’ rating and $27-$37 fair value estimate. The analyst said that X-energy is a pre-revenue nuclear small modular reactor company with a capital-light, high-margin business model, and also noted that it prefers X-energy to rival Oklo Inc. (OKLO) due to its lower-risk business model and support from Amazon.com Inc. (AMZN).

Apart from these, five other firms also initiated coverage on X-Energy, with price targets ranging from $28 to $41.

XE Market Debut

X-Energy went public on April 24 on the Nasdaq Global Select Market. The company’s stock opened at $30.11 after it upsized its initial offering, which was priced at $23 per share.

The company’s public listing raised more than $1 billion, making it the largest nuclear public offering on record.

Amazon owns about 20% of X-Energy, and has invested $500 million in the company to help advance more than 5 GW of new nuclear capacity in the U.S. by 2039. The company has also received funding from the U.S. Department of Energy.

XE Stock: Retail Stance

On Stocktwits, retail sentiment around XE shares has been in the ‘bearish’ territory.

One bullish user said, “Important to note, this has around 45 million available shares trading currently. At this volume it would only take 3 weeks for this to go bonkers. Same thing if sold into volume.”

Another user said, “told ya it would rip, today.  Hope you listened,” after the company’s share price closed more than 4.5% higher.

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