NuScale Power Corporation
Market implies ~45% conversion of the TVA/ENTRA1 pipeline; a stage-gate framework says 65% — $2.48/sh the market isn't pricing.
Investment Thesis
We rate NuScale Power (NYSE: SMR) BUY with a $14.19 price target (+21.3% upside from $11.70), supported by a probability-weighted SOTP valuation that identifies $5.53/sh in high-certainty floor value and a 20-point probability premium on the TVA/ENTRA1 module pipeline relative to market-implied expectations.
Our two differentiated views — a pipeline probability mismatch and two above-consensus service streams — are independently sufficient to justify the BUY rating and together establish an asymmetric risk/reward of approximately 2:1.
Four concurrent milestones support our 65% estimate: (1) PPA legal teams actively drafting — historical close rate 60–65%; (2) Multibillion-dollar financing term sheet signed — 75–80%; (3) Four sites identified and evaluated; (4) TVA board authorization confirmed January 2026.
SOTP Valuation
Traditional valuation approaches are inappropriate for a pre-module-revenue company with asymmetric cash flows. SOTP is the correct methodology because NuScale's value drivers are structurally distinct.
| Component | Gross $/sh | Probability | Wtd $/sh | % of Target |
|---|---|---|---|---|
| Adjusted Net Cash | $3.50 | 100% | $3.50 | 24.7% |
| Services Business (5-stream) | $2.26 | 90% | $2.03 | 14.3% |
| SMR Module Pipeline (72 modules) | $12.60 | 65% | $8.19 | 57.7% |
| Customer Optionality | $2.35 | 20% | $0.47 | 3.3% |
| Price Target (SOTP) | $20.71 gross | — | $14.19 | 100% |
Scenario Analysis
The resulting 2:1 upside-to-downside asymmetry, supported by a $5.53/sh high-certainty floor, underpins our BUY recommendation.
Industry Context
U.S. electricity demand — flat for nearly two decades — is reversing. Total demand projected to reach ~5,179 TWh by 2030 (~4% CAGR). Data center electricity demand is growing at ~25% CAGR, from 4% of U.S. power consumption to ~14% by 2030. Nuclear power is emerging as the only scalable, zero-carbon baseload solution capable of meeting multi-gigawatt continuous load requirements. BloombergNEF estimates 362 GW of additional global capacity required by 2035 for data centers alone.