NuScale Power Stock Gets A Downgrade By BofA On Valuation Concerns

NuScale Power Corp. (SMR) stock received a downgrade and a price target cut from Bank of America analyst Dimple Gosai on valuation concerns.

According to a report by TheFly, Gosai downgraded NuScale to ‘Underperform’ from ‘Neutral’, while lowering the price target to $34 from $38. The new target implies a downside of over 12% from the stock’s closing price on Monday.

NuScale’s shares were down nearly 5% in Tuesday’s pre-market trading. Retail sentiment on Stocktwits around the company trended in the ‘neutral’ territory.

According to Gosai, NuScale’s valuation now includes the ramp-up of deployment of the company’s small modular reactor (SMR) technology, as well as discount rates which the analyst views as "unrealistic at this stage" of SMR adoption.

While Gosai is optimistic about the long-term prospects of NuScale’s nuclear power technology, the analyst says the company’s current valuations “leave little room for error and the near-term risk/reward skews negative.”

On Monday, Barclays initiated coverage of the NuScale stock with an ‘Equal Weight’ rating, with a $45 price target, according to TheFly. This implies a potential 18% upside from the stock’s closing price on Monday. The firm noted that the limited investment options in the SMR theme are helping the stock.

Barclays added that for NuScale’s current valuations to be justified, the company’s execution of its strategy needs to catch up.

SMR stock is up 113% year-to-date and 230% over the past 12 months.

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