NuScale Power stock holds steady as UBS reiterates Neutral rating

NuScale Power (SMR) has seen its stock surge over 140% in six months, though it faces valuation concerns and recently reported a Q2 2025 earnings miss with a significant revenue shortfall. A key development is a non-binding Memorandum of Understanding between TVA and ENTRA1 Energy for up to 6GW of NuScale's small modular reactor technology, which UBS views as a significant upside potential despite the lack of firm terms, leading them to maintain a Neutral rating. This long-term growth prospect is balanced by immediate capital needs, evidenced by a new $500 million at-the-market stock offering.

Analysis

NuScale Power (SMR) presents a dichotomy of significant long-term potential against near-term fundamental weaknesses and execution risks. The stock's valuation has expanded dramatically, surging over 140% in the last six months, driven by developments like the non-binding Memorandum of Understanding between the Tennessee Valley Authority (TVA) and ENTRA1 Energy. This agreement, for the potential deployment of up to 6GW of capacity using NuScale's modules, represents substantial upside, as noted by UBS. However, this optimism is tempered by immediate financial realities. The company reported a second-quarter 2025 earnings miss, with an EPS of -$0.13 versus a -$0.11 forecast, and a significant revenue shortfall of 31.88% ($8.1 million actual vs. $11.89 million anticipated). Furthermore, NuScale is pursuing a $500 million at-the-market stock offering, signaling capital needs and potential shareholder dilution. This is compounded by a committed contribution of $35 million to $55 million for its partnership with ENTRA1. Analyst sentiment remains cautious, with both UBS and BofA Securities maintaining Neutral ratings, reflecting the uncertainty surrounding the timeline and financial terms of the non-binding TVA deal.

Key Decisions for Investors

• Given the stock's 140% run-up and recent earnings miss, investors may consider trimming positions to lock in gains while retaining exposure to the long-term potential of the TVA/ENTRA1 agreement.
• Potential investors should exercise caution due to the non-binding nature of the key growth catalyst and the recent revenue shortfall, and should monitor for the MoU converting into a firm customer commitment before initiating a position.
• All parties should closely monitor the progress and impact of the $500 million at-the-market offering, as the resulting share dilution could create significant headwinds for the stock price.