NuScale Power Slips After UBS Downgrades to 'Sell' on Project Delays

Shares of NuScale Power Corp. (NYSE:SMR) fell 4.4% in pre-market trading on Friday after UBS downgraded the stock to "Sell" from a previous "Neutral" rating. The bank also significantly cut its price target on the company to $6.00 from $10.00, suggesting a potential downside of approximately 40% from its prior closing price.

Analyst's Rationale

In a note to clients, UBS analyst Jon Windham pointed to the company's prolonged construction timeline and a lack of firm customer commitments as primary drivers for the downgrade. The analyst noted that NuScale's construction cycle of over five years puts it at a distinct disadvantage as competitors appear to be moving forward more aggressively.

UBS now forecasts that NuScale will only have one project starting in 2028. The bank highlighted several specific risks that could widen the gap between current market expectations and its more conservative outlook, including:

• Potential for further project delays.
• Obstacles related to its partnership with RoPower.
• Limited progress with the Tennessee Valley Authority.

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Financial Projections and Valuation

UBS projects a cumulative cash burn of approximately $700 million for NuScale between 2026 and 2028. While the bank anticipates strong revenue growth from $185 million in 2028 to $924 million in 2030—a compound annual growth rate (CAGR) of 123%—it expects profitability to remain elusive, with earnings forecast to stay negative through 2030.

A key part of the bank's thesis is a significant valuation disconnect. Windham estimates the market is currently pricing in $124 million in EBITDA for 2028, whereas UBS's own forecast is just $29 million. This discrepancy underscores the bank's bearish view on the stock's current valuation.