NuScale Power stock: why fresh SMR progress is back in focus

NuScale Power (SMR) is back on investors’ radar after two recent developments: a new contract with Paragon for safety systems design and the continued rollout of Energy Exploration Centers tied to its small modular reactor technology.

Despite the fresh contract news and expanding E2 Center footprint, NuScale Power’s share price has been under pressure, with the stock down 39.36% year to date and total shareholder return declining 74.80% over the past year, while the 3 year total shareholder return remains positive.

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With NuScale Power stock down sharply over the past year yet trading at a sizeable discount to the average analyst price target of US$15.36, you have to ask: is this a mispriced SMR pioneer, or is the market already weighing future growth and risks correctly?

Most Popular Narrative: 90.1% Undervalued

Against the last close of $9.89, the most followed narrative on NuScale Power sets a fair value of $100.00, which is a very large gap that frames the stock in a very different way to recent price action.

Its my fudemental belief that retail has strayed from real long-term value, and towards a perverse sentiment rooted purely in numbers. The market looked at NuScale's 2023 project cancellation and saw a failed company. That's the wrong frame. What actually happened is that a first-of-kind technology encountered the first regulatory hurdle and cost discovery, which is not a verdict on the technology, it's the expected friction of building something that has never been built at commercial scale before.

Curious how this fair value of $100.00 gets justified against a single digit share price? The narrative leans heavily on revenue expansion, future margins and a valuation multiple usually reserved for mature compounders. Want to see which assumptions have to hold to support that jump?

Result: Fair Value of $100.00 (UNDERVALUED)

However, NuScale Power’s narrative could be challenged if project timelines slip further or if ongoing losses of $385.804 million raise fresh funding and dilution concerns.

Next Steps

With sentiment clearly split between concern over risks and optimism about potential rewards, it makes sense to review the data yourself and move quickly to form an independent view using the 1 key reward and 3 important warning signs.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.