Why NuScale Power Stock Just Crashed
Key Points
UBS analyst Jon Windham downgraded NuScale Power from neutral to sell this morning.
NuScale could burn $700 million -- or even $1 billion -- before it starts generating meaningful revenue.
- 10 stocks we like better than NuScale Power ›
NuScale Power (NYSE: SMR) stock crashed 13.5% through 2 p.m. ET Friday. You can blame Swiss bank UBS for that.
This morning, in a note covered on StreetInsider.com, UBS analyst Jon Windham downgraded NuScale Power from neutral to sell, and slapped a $6 price target on the $8.80 stock.
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Why did UBS downgrade NuScale stock?
The decision to rerate NuScale seems only logical, seeing as Windham had the stock rated "neutral" and valued at $10 as recently as yesterday. Revisiting his valuation today and discovering NuScale was worth much less than $10 -- roughly its share price just last night -- necessitated the decision to call NuScale a "sell."
But why did the analyst cut its target price in the first place?
NuScale's competitors, confides Windham, are approaching the point at which they can begin building nuclear power plants, yet "NuScale's estimated 5+ year build timeline and lack of firm customer commitments" suggest it's starting to fall behind in this race. Best case, Windham thinks we might see NuScale begin one single construction project by 2028.
What's next for NuScale stock?
In the meantime, NuScale's burning a lot of cash. UBS estimates that from 2026 to 2028, NuScale will suffer $700 million in negative free cash flow, which will consume approximately 65% of its cash on hand.
And that's the good news. The bad news is that other analysts think things might get even worse for NuScale, with analysts polled by S&P Global Market Intelligence estimating 2026-2028 cash burn closer to $1 billion. That's a number that would drain NuScale's coffers nearly dry.
Things might start to improve in 2028, with revenue expected to rise from $11 million (today) to $185 million, says Windham. Getting to that point without running out of money first -- that's the problem NuScale must overcome.
Should you buy stock in NuScale Power right now?
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.
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