Barclays Turned Bearish on NuScale Power at a 52-Week Low. Here's the Single Missing Contract That Would Prove It Wrong.

Shares of NuScale Power (NYSE: SMR) are down more than 85% from their 52-week high. Barclays reduced its price target on the stock in late October, dropping it from $11 to $5. The stock currently trades at around $5 per share, so the Wall Street firm is basically suggesting the stock is fully valued. A signed contract with ENTRA1 Energy or RoPower could prove Barclays wrong. Here's what you need to know.

NuScale's technology is untested

Nuclear power isn't new, and NuScale Power isn't trying to reinvent the wheel. What it has basically done is downsize existing nuclear power technology while using the most modern safety protocols in its small modular nuclear reactor (SMR) design. That design has received key regulatory approvals, so the company has achieved significant success.

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There's just one problem. NuScale Power has yet to find an official customer. It has irons in the fire, but nobody has signed on the dotted line yet. That's a big reason why Barclays turned bearish on the stock. Essentially, until the company actually has an agreement to sell an SMR, there's no way to really know how much of an opportunity there is for the business. And if it can't get that first contract, well, then there is no opportunity at all.

As a money-losing start-up, the clock is ticking. That's not to suggest that NuScale Power is at imminent risk of running out of money, but at the end of the second quarter of 2026 it had a little over $1 billion of cash on its balance sheet. At the start of the year, it had a bit over $1.2 billion. There's more room for the company to burn through cash as it awaits its first contract, but at some point the cash will run out.

Two deals could change the story

NuScale Power has two potential sales lined up, and either one could materially improve the business outlook. In Romania, RoPower, a utility company, has given the green light to a nuclear power plant project that would use six NuScale SMRs. But RoPower still has to find funding for the project before it can begin. NuScale Power just has to wait and hope.

ENTRA1 Energy is in "advance discussions" with the Tennessee Valley Authority around a "power purchase agreement for potentially the largest nuclear power deployment program in U.S. history." NuScale Power's SMR technology is in the mix. But, like RoPower, there's no final agreement yet. Barclays notes that ENTRA1 Energy and the Tennessee Valley Authority are likely to be negotiating until at least early 2027. So there's no near-term catalyst for NuScale Power's business there, either.

A signed contract for a NuScale SMR would be a huge step forward, but even that has to be taken with a grain of salt. Once a deal is inked, NuScale Power will have to build and deliver its SMRs, and they would have to operate as expected, before the company's technology is fully proven out. So a signed contract is important, but it is just a step along the way.

NuScale is a high-risk investment

NuScale Power is only appropriate for more aggressive growth investors. Right now, it is bleeding cash as it tries to find its first official customer. Once it does, it will likely continue to bleed cash as it works to build and deliver its first SMR. A signed contract will change the story in a big way, perhaps even proving Barclays' negativity wrong. But there's still a lot of work to be done even after the first contract is signed. Most investors should probably watch from the sidelines for now.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.