Canaccord cuts Nuscale Power stock price target on contract uncertainty

Investing.com reports that Canaccord has lowered its price target on Nuscale Power (NYSE:SMR) stock to $11 from $15, while keeping a Buy rating. The firm cited ongoing uncertainty surrounding a power purchase agreement with the Tennessee Valley Authority. NuScale recently disclosed measured results that provided little new certainty.

Despite an announced pact a year ago to build 6 gigawatts of power, the binding power purchase agreement between Entra1 and the TVA remains unsigned. The stock experienced a 22% drop over the past week, trading near its 52-week low of $4.28. Among 17 InvestingPro Tips for SMR, analysts note the stock is oversold based on RSI indicators.

Canaccord expressed skepticism about execution and the unusual financing structure between NuScale and Entra1, stating that without a signed agreement, the modules remain on paper. The firm highlighted NuScale's standard design approval from the Nuclear Regulatory Commission as a major advantage, alongside its recent agreement with Doosan Enerbility for upper reactor coolant systems.

NuScale is currently trading near cash with a quarterly cash burn. Canaccord calculated the $11 price target using discounted cash flow, with roughly 15% weighted average cost of capital and 5% terminal growth rate. The firm continues to de-risk its model by pushing back initial deployments and adjusting long-term assumptions. InvestingPro analysis suggests the stock is undervalued based on its Fair Value assessment.