NuScale Power (NYSE: SMR) stock went thermonuclear on Monday, soaring on the back of a price target hike from analysts at Canaccord Genuity, and adding to gains since the company reported earnings on Thursday.
As of 11 a.m. ET, NuScale stock is up 26.9%.
What this Wall Street analyst said
Canaccord nearly doubled its price target on NuScale stock today, to $8 per share, citing rising demand for electricity in the United States, a bigger opportunity for nuclear energy to power that growth -- and explaining that demand for electricity to power artificial intelligence (AI) is behind it all.
Is NuScale stock a buy?
Canaccord's excitement is understandable. NuScale claims to be the leader in "innovative advanced small modular reactor (SMR) nuclear technology," and says it's "the first and only SMR to receive U.S. Nuclear Regulatory Commission design approval." That being said, its financial report last week failed to impress. Although revenue nearly doubled in 2023 versus 2022 to $22.8 million, gross margin deteriorated, and NuScale ended the year with a $180.1 million loss, which was worse than anticipated.
What's really curious about investors' reaction to today's price target hike, though, is that Canaccord only said it thinks NuScale stock is worth $8 a share -- but investors have already bid the stock up to nearly $10 a share. That means that even if Canaccord is right about the stock, it's now arguably 25% overpriced.
Granted, it's hard to hang a helpful valuation on a stock with no profits. But if even NuScale's fans think it costs too much, perhaps momentum traders should be just a bit more cautious about buying it.
Should you invest $1,000 in NuScale Power right now?
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends NuScale Power. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
