NuScale Power Stock Has 195% Upside, According to This Wall Street Analyst
A Wall Street expert, George Gianarikas, believes NuScale Power stock has 195% upside potential from its current price. He cites the company's partnership with ENTRA1 and TVA, as well as its Romanian SMR system, as key factors. Gianarikas uses an aggressive 5% terminal gr…
Intelligence analysis by Llama
A Wall Street expert remains bullish on NuScale Power stock, citing the company's partnership with ENTRA1 and TVA, as well as its Romanian SMR system. He uses an aggressive 5% terminal growth rate in his model, which estimates the value of NuScale's stock.
Imagine you have a lemonade stand, and you're trying to grow your business. You partner with a big company to make more lemonade, and you also get permission to sell lemonade in a new place. This could help you make more money and grow your business. A Wall Street expert thinks that NuScale Power, a company that makes nuclear energy, has a similar opportunity. He thinks that the company's partnership with a big company and its permission to sell nuclear energy in a new place could help it grow and make more money.
Analysis
A $60B Vote of Confidence
George Gianarikas, a veteran analyst at Canaccord Genuity, thinks NuScale Power stock has 195% in upside from its current deflated price. He's not alone. Three other analysts in a list compiled by TipRanks.com also believe NuScale stock has at least 100% upside potential over the next 12 months. Why is Gianarikas so bullish? Let's find out.
Gianarikas isn't excited about NuScale Power stock for any one reason. In his view, there are multiple factors lining up right now that should benefit NuScale's business and its stock price. Gianarikas is particularly excited about NuScale's partnership with ENTRA1 and TVA. This partnership aims to build a 6-gigawatt small modular reactor (SMR) somewhere on the eastern U.S. coast. According to reports, Gianarikas sees this project as "a transformative opportunity that could significantly accelerate NuScale's path to commercialization and scale." I am also excited about this project. To me, it represents NuScale's best opportunity to get one of its SMR nuclear systems into commercial operation. That's because NuScale's CEO expects to sign a power purchasing agreement by the end of 2026, formally committing the utility to buying power from NuScale's facility, perhaps for decades to come.
Gianarikas is also bullish on NuScale's Romanian SMR system. This project recently received critical approval from Romanian regulators, which caused some excitement. However, I'm not attributing much value to this opportunity. The Romanian project has faced several costly delays over the years, and by some estimates, the project won't be commercially viable until 2033 or 2034.
Why Cursor?
Perhaps most critically, Gianarikas apparently uses a 5% terminal growth rate for his model that estimates the value of NuScale's stock. Most analysts don't forecast a company's financials indefinitely. Often, only a small handful of years are modeled in any detail. Analysts then apply a flat growth rate that extrapolates the final prediction year into perpetuity. Because this flat growth rate extends indefinitely, even small changes to the assumption can have huge effects on the final valuation estimate. Terminal growth rates are often set between 2% and 4%, trying to mimic expected inflation or gross domestic product growth rates. A 5% terminal growth rate is generally considered aggressive. To be sure, NuScale has a massive long-term growth runway. This is the type of business that could reasonably warrant an elevated terminal growth rate assumption. But investors should understand that Gianarikas' bullishness doesn't just stem from NuScale's cheap stock price. It's also a factor of aggressive assumptions for the company's growth trajectory.
The Road Ahead
The Nuclear Energy Comeback Is Real. These 3 Energy Stocks Are the Best Ways to Play the Revival.
Key points
- A Wall Street expert believes NuScale Power stock has 195% upside potential from its current price.
- The expert cites the company's partnership with ENTRA1 and TVA, as well as its Romanian SMR system, as key factors.
- Gianarikas uses an aggressive 5% terminal growth rate in his model, which estimates the value of NuScale's stock.
If NuScale Power's partnership with ENTRA1 and TVA is successful, the company's stock price could increase significantly. Additionally, the company's Romanian SMR system could also contribute to its growth. However, investors should be aware that the company's growth trajectory is uncertain and may be affected by various factors.
If NuScale Power's partnership with ENTRA1 and TVA fails to materialize, the company's stock price could decline. Additionally, the company's Romanian SMR system has faced several costly delays, which could impact its growth prospects.
