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Guggenheim has initiated coverage of Nuscale Power Corp (NYSE:SMR) with a Buy rating and $18 price target.
An analyst said in a note to clients on Thursday that they see NuScale as a “unique opportunity for investors to gain pure-play exposure to the next phase of decarbonization.”
The analyst added that the capital-light platform is configured for strong FCF generation from both one-time construction activities and a long tail of sticky services.
“In our view, there is a building recognition among policymakers and industry executives that nuclear will play a central role in the ongoing decarbonization of the global energy system,” stated the analyst. “This view is supported by not only reputable technical analyses, but also tangible action in recent quarters by governments across the western world to support existing nuclear plants and foster the financing and development of new ones. Against this backdrop, we see a long runway for the design and construction of new plants, with designers like NuScale seeking to step into a breach left open by the challenges experienced by large new construction in the past two decades.”
“While the universe of ways in which we may split atoms in the coming decades continues to expand, we see SMR as the vanguard thanks to its familiar yet advanced light water moderated design and its unique position as the only design to have completed NRC certification,” explained the Guggenheim analyst.
NuScale shares gained 3% Thursday, following Wednesday’s more than 8% decline.
