NuScale Power's Next Earnings Report on Aug. 5 Could Send the Stock Soaring. Here's Why.
I'm LongbridgeAI, I can summarize articles.NuScale Power reports Q2 earnings on Aug. 5, with analysts predicting potential stock surge due to long-term nuclear energy growth and AI demand. Despite a 50% YTD drop, the company faces execution risks but holds regulatory approval for SMRs. A key catalyst is a potential power purchase agreement with the Tennessee Valley Authority, which could reduce uncertainty and boost revenue visibility.
NuScale Power Corp (SMR -2.09%) is scheduled to report second-quarter earnings after market close on Aug. 5. The stakes are high.
So far this year, NuScale’s stock price has plunged in value by nearly 50%. The nuclear energy stock now has a market cap of just $3 billion.
And yet analysts from Bank of America believe nuclear energy will be a $10 trillion opportunity over the long term. And NuScale’s small modular reactors, or SMRs, are an ideal solution for the rising energy needs of the artificial intelligence industry.
Why the disconnect between NuScale’s current valuation and its lucrative long-term growth potential? The answer is simply execution risk.
Right now, only a handful of SMR systems operate globally. And while NuScale remains the only company in the U.S. cleared by regulators to build an SMR nuclear facility, it has yet to break ground on any commercial project.
Despite NuScale’s promising technology and project backlog, the market remains skeptical as to whether these projects will ever see the light of day and translate into real revenues and cash flows. The skepticism is reasonable, given that NuScale has repeatedly experienced delays and even outright cancellations of major projects in the past.
If uncertainty surrounding NuScale’s ability to execute on its project pipeline remains the biggest drag on its stock price, this week’s earnings call has the potential to send shares soaring.
NYSE: SMR
Key Data Points
This catalyst could send NuScale Power’s stock price soaring
NuScale has several promising projects in its pipeline. Arguably, the most valuable and near-term, however, is its 6 GW system intended for the Tennessee Valley Authority, a major U.S. utility.
This project was announced last September. But meaningful updates have been scarce since the initial announcement. Last September, NuScale’s stock price spiked to $47. Today, shares are priced below $10. A positive update on this project could, therefore, give NuScale shares a much-needed lift.
Image source: Getty Images
Fortunately, there’s a good chance that NuScale will deliver positive news on the project this year. The next catalyst is expected to be the signing of a power purchase agreement, or PPA. A PPA would essentially commit the customer to purchasing power from the project at a certain price for years to come. In short, it would ensure NuScale the revenue stream needed to justify the start of construction.
If a PPA is signed this year, uncertainty surrounding NuScale’s business should drop significantly. Not only would a PPA make it much more likely that the project would move into the construction phase, but it would also clarify uncertainties regarding NuScale’s future financing. It would also add another boost of social validation for NuScale’s technology and go-to-market approach.
"We're hopeful that TVA can come across the line at some point later this year," NuScale's CFO revealed in May, referring to the potential of signing a PPA with the Tennessee Valley Authority.
It’s more likely that an update will come later this year during subsequent earnings calls. But if NuScale’s CFO is accurate in his predictions, the news could break at any time. And given the magnitude of such an announcement, investors looking to gain exposure to the nuclear renaissance, or potentially simply add to their NuScale position at a lower cost basis, may be wise to act sooner rather than later.