Key Takeaways
- UBS shifted NuScale Power (SMR) from Neutral to Sell, slashing the price target from $10 down to $6
- Shares plummeted approximately 9.4% following the downgrade after a recent speculative surge linked to artificial intelligence energy needs
- Analyst Jon Windham at UBS highlighted the company’s prolonged construction timeline and absence of binding customer deals
- The investment bank anticipates around $700 million in combined cash losses spanning 2026 to 2028, with profitability not expected until after 2030
- Additional worries include slow advancement with the Tennessee Valley Authority partnership and complications involving the RoPower initiative
NuScale Power (SMR) experienced a significant decline on Friday after UBS shifted its rating to Sell from Neutral and lowered the price objective to $6 from $10. Shares dropped 4.4% in premarket activity immediately after the announcement and ultimately declined as much as 9.4% during regular trading hours.
NuScale Power Corporation, SMR
The rating change follows a brief rally earlier in the trading week, fueled by speculative enthusiasm around artificial intelligence-related electricity demand. Investors began taking profits as underlying business challenges came back into focus.
Jon Windham, analyst at UBS, highlighted NuScale’s construction timeframe of five years or longer as a critical weakness. He observed that rival companies are already advancing toward building phases while NuScale continues seeking solid commitments from customers.
In his baseline scenario, Windham anticipates only a single NuScale facility breaking ground in 2028. This represents a more cautious outlook than what the stock’s current market pricing seems to incorporate.
Financial Burn Rate and Sales Projections
UBS forecasts combined cash consumption totaling approximately $700 million across the 2026-2028 period. Sales are anticipated to expand from $185 million in 2028 to $924 million by 2030, representing a compound annual growth rate of 123%.
Even with that substantial projected expansion, the company isn’t expected to achieve positive earnings until sometime after 2030. UBS calculates that the market currently prices in $124 million of 2028 EBITDA, while the firm’s own projection sits at merely $29 million.
This substantial disconnect between market assumptions and UBS’s financial modeling forms the foundation of the downgrade decision. The revised $6 price target suggests approximately 40% potential downside from present trading levels.
Windham additionally pointed to minimal advancement in discussions with the Tennessee Valley Authority and difficulties surrounding the RoPower project as factors that could further expand the divide between investor optimism and operational reality.
Market Price Outpacing Business Progress
The selloff also mirrors wider investor anxiety that NuScale’s market valuation had surged beyond its actual commercial progress. The company operates with minimal revenue generation and lacks any confirmed power purchase commitments.
NuScale does possess regulatory approval and has completed sophisticated design development, which could provide competitive benefits when utility companies and data center operators start choosing small modular reactor vendors.
However, at present, the investment thesis depends on securing significant contracts and obtaining project financing. Any postponements in converting its technological capabilities into revenue-generating projects may create additional downward pressure on share performance.
For the year to date, SMR has declined 23.71%. Average daily volume stands at roughly 32 million shares, with technical indicators currently signaling a Sell recommendation.
The company’s present market capitalization is approximately $4.8 billion.
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