NuScale Power: The BofA Upgrade and the Next Catalyst

The stock's surge is a direct reaction to two events that together provide a rare moment of concrete progress for a company long viewed as a concept. Shares jumped more than 12% in Friday's pre-market trade following an upgrade from BofA. The bank moved the stock to 'Neutral' from 'Underperform' and trimmed its price target to $28. This is a tactical re-rating catalyst, a signal that the stock's recent correction may be over.

Yet the move is fundamentally anchored by two credibility boosters. First, the U.S. Nuclear Regulatory Commission approved NuScale's uprated reactor design in May 2025. This wasn't just another regulatory tick; it was a validation of a derisked design that cleared a critical technical hurdle. Second, the Tennessee Valley Authority's licensing agreement provides a tangible path to deployment. The TVA deal, announced in September 2025, is a major step toward the commercial contracts that have been the stock's missing piece.

BofA's upgrade is a recognition of this progress. The firm noted that these two events-the derisked Light-Water Reactor design and the TVA licensing agreement-bolster NuScale's credibility. The stock's pop is the market pricing in this improved narrative. The analyst's new price target implies significant upside, but the firm also cautions that limited contract visibility caps the upside for the SMR stock in the near term. The catalyst is here, but the path from approval to profit remains a work in progress.

The Deal: TVA Licensing and Deployment Scale

The TVA licensing agreement is the first concrete step toward commercialization. It opens the door for the deployment of up to six gigawatts of nuclear capacity using NuScale's SMR technology. This isn't a mere letter of intent; it's a binding agreement that provides a clear pathway for future orders. For a company that has long lacked a commercial contract, this is a critical credibility builder. It moves the narrative from theoretical potential to a tangible project pipeline.

Yet the market's reaction to this opportunity is telling. While the stock is up 39% year-to-date, it has been essentially flat over the past 12 months. This divergence suggests the near-term commercial potential is already being priced in. The recent surge on the BofA upgrade is a re-rating of the stock's risk profile, not a discovery of new upside. The TVA deal sets the stage for future orders, but the stock's flat performance over the last year indicates investors are waiting for the next catalyst to see if that stage will be filled with actual contracts.

The Trade Setup: Upside, Risks, and Next Catalysts

The BofA upgrade sets a clear tactical target. The new price point of $28 implies a 42% upside from the stock's close last week. That's a substantial re-rating from the prior $34 target, but it's still a forward-looking estimate. The firm's move to 'Neutral' signals the stock is now seen as a base-case play, not a high-conviction buy. The real trade here is betting that the recent approval and licensing deal are enough to justify this re-rating, while the market waits for the next proof point.

The primary risk is the long, capital-intensive path ahead. NuScale remains a pure-play on future contracts and financing. The company is not yet profitable, and the timeline from a licensing agreement to a first plant being built is measured in years, not quarters. This creates a classic "re-rating phase" for a long time. The stock's flat performance over the past year shows that the market has already priced in the potential of the TVA deal. Any further gains will require concrete progress on the commercialization front.

The next catalysts are specific and binary. The first is an order announcement from the TVA or another utility. The licensing agreement is a start, but the next step is a firm commitment to purchase a specific number of modules. The second key catalyst is progress on financing for the first plant. Even with regulatory approval, building a nuclear plant requires massive capital. Securing project financing is a major hurdle that must be cleared before construction can begin. Until one of these events occurs, the stock's momentum will likely remain tied to sentiment around the broader nuclear energy sector and the company's ability to keep its credibility intact.