BUYNYSE: SMRAdvanced Nuclear EnergyPT: $14.19+21.3% UpsideInitiated Mar 6, 2026
NuScale Power Corporation
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.
01
Market Implies ~45% Pipeline Conversion; We See 65%
At $11.70, the market assigns 45.2% probability to the 72-module TVA/ENTRA1 pipeline converting — derived directly from our reverse DCF. We believe the correct probability is 65%, anchored in stage-gate historical close rates. The 20-point gap generates $741M in incremental probability-weighted value, or $2.48/sh — the primary driver of our price target.
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.
02
Two Service Revenue Streams Underrepresented in Consensus
Consensus models NuScale as a two-stream services business through FY2028E. We model five streams incorporating ENTRA1 COLA/FEED services and industrial heat/hyperscaler licensing starting FY27. This drives our FY2026E revenue of $113.9M (+10.5% vs. consensus) and FY2028E revenue of $268.0M (+16.5% vs. consensus) — with zero module revenue assumed in either year.
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
Bull Case
$17.15
+46.5%
Base Case
$14.19
+21.3%
Bear Case
$8.79
−24.8%
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.
Key Risks
High
PPA Execution Failure or Delay
Failure to execute by Q3 2026 compresses module probability toward market-implied ~45%, reducing valuation by ~$2.5/sh and pushing toward the $8.79 bear case. Legal drafting and board-level approvals already underway.
Med-High
NRC Timeline Extension
A 12-month delay reduces module NPV by ~$0.40/sh (probability-weighted). 15% WACC already embeds substantial regulatory risk.
Med-High
ENTRA1 Counterparty Risk
ENTRA1 is the exclusive commercialization partner. Financing failure at ENTRA1 would directly impair the largest value component. Multibillion-dollar term sheet provides third-party validation.
Low-Med
Cash Burn and Dilution
With $1.0B+ net cash and no debt, NuScale has ~5 years of runway. Sustained delays beyond FY2031 could require external capital.
Full Report — NuScale Power (SMR)
13 pages · Applied Security Analysis Program · Wisconsin School of Business · March 2026