B of A Securities initiates NuScale Power coverage at Neutral, sets PT at $36.

B of A Securities initiates NuScale Power coverage at Neutral, sets PT at $36.

Bank of America Securities has initiated coverage on NuScale Power (NYSE: SMR) with a Neutral rating and a price target of $36. The move comes after the company's stock has been volatile, with shares down by nearly 40% from their July high. The recent decline is attributed to a combination of factors, including a significant insider stock sale by Fluor Enterprises, NuScale's largest shareholder, and underwhelming second-quarter financial results [1].

Fluor Enterprises, through a stock exchange agreement, will sell 15 million Class B shares of NuScale stock for 15 million Class A shares. This transaction, which took place on Aug. 12, allows Fluor to start selling the shares on Sept. 11, potentially diluting the value of existing shares [1]. The anticipation of this large-scale sale has likely contributed to the recent decline in NuScale's stock price.

Additionally, NuScale reported its second-quarter results on Aug. 7, which featured lower-than-expected revenue of $8.1 million and a net loss of $0.13 per share. The company's stock dropped another 12% in response to these results and has continued to slide since [1].

Despite the recent setbacks, NuScale remains up 82% year to date as of Aug. 19, outperforming the S&P 500's approximately 10% gain. The company's focus on small modular reactors (SMRs) is still a speculative bet on the future of nuclear power, but it is in the development phase, awaiting a firm order for a reactor by the end of 2025 [1].

The Neutral rating from Bank of America Securities reflects the current uncertainty surrounding NuScale's stock. Investors should closely monitor the company's progress and the potential impact of Fluor's stock sale on its share price. While the 82% year-to-date gain is impressive, the recent volatility suggests that NuScale's stock is still a risky investment.

References:
[1] https://www.nasdaq.com/articles/why-nuscale-power-stock-sliding-right-now