NuScale Shares Fall After UBS Downgrade Cites Timeline Risks
UBS downgraded NuScale Power to Sell, cutting its price target to $6 over concerns regarding construction delays and a lack of firm customer commitments.
NuScale Power shares dropped more than 8% on Friday following a downgrade from UBS, which moved the rating from Neutral to Sell. The firm slashed its price target to $6 from $10, citing significant risks in the company's build timeline and the absence of finalized customer agreements.
UBS analysts noted that competitors are progressing toward construction while NuScale faces a projected build timeline exceeding five years. The firm now assumes only one project will commence construction in 2028 and forecasts approximately $700 million in cumulative cash burn between 2026 and 2028.
UBS Cites Execution Risks In Downgrade
The downgrade reflects UBS's view that NuScale's current position presents meaningful challenges compared to rivals. According to TheFly, the firm’s revised model implies roughly 41% downside potential from the previous closing level of $10.21. This stance contrasts with other brokers, such as B. Riley, which recently lowered its target to $15 while maintaining a Buy rating based on project progress.
The core of the concern lies in the transition from discussion to deployment. UBS argues that the lack of firm customer commitments creates uncertainty, while RBC Capital has similarly flagged timing issues despite acknowledging project advancements. The market reaction highlights a growing divergence in Wall Street opinions on the speed of commercial deployment.
Project Pipeline And Liquidity Position
NuScale continues to advance discussions with ENTRA1 Energy and the Tennessee Valley Authority toward a definitive power purchase agreement. The company is also working with S.N. Nuclearelectrica and RoPower Nuclear on the Doicești project in Romania, which would deploy six modules at a former coal plant site. These initiatives represent key milestones in the company's global strategic partnership efforts.
Despite the bearish outlook, NuScale ended the second quarter with $1.9 billion in cash, cash equivalents, and investments, up from $1.01 billion at the end of the first quarter. Investment income increased by $8.5 million year over year, driven by the larger cash balance and higher holdings of short- and long-term investments.
Market Sentiment Remains Mixed
Retail sentiment on Stocktwits remained bullish with high message volume, even as the stock fell sharply. However, SMR shares have declined more than 42% year-to-date, significantly underperforming the S&P 500, which has risen 11.8% over the same period. The UBS move underscores the ongoing debate regarding the pace of commercial nuclear deployment.
