TLDR
- UBS downgraded NuScale Power (SMR) from Neutral to Sell, cutting its price target from $10 to $6
- The stock dropped around 9.4% as the downgrade followed an earlier speculative rally tied to AI power demand
- UBS analyst Jon Windham flagged NuScale’s extended build timeline and lack of firm customer commitments
- UBS forecasts roughly $700 million in cumulative cash burn from 2026 through 2028, with earnings negative through 2030
- Concerns also include limited progress with the Tennessee Valley Authority and setbacks with the RoPower project
NuScale Power (SMR) took a sharp hit Friday after UBS downgraded the stock to Sell from Neutral and cut its price target to $6 from $10. The stock was down 4.4% in premarket trading following the downgrade, and fell as much as 9.4% on the day.
NuScale Power Corporation, SMR
The downgrade comes after SMR had rallied earlier in the week, driven by speculative interest linked to AI-driven power demand. Traders began locking in gains as fundamental concerns resurfaced.
UBS analyst Jon Windham pointed to NuScale’s extended build timeline of five or more years as a key issue. He noted that competitors are already moving toward construction while NuScale is still working to secure firm commitments.
Windham’s base case assumes only one NuScale project begins construction in 2028. That is a conservative view compared to what the current market valuation appears to reflect.
Cash Burn and Revenue Outlook
UBS projects cumulative cash burn of around $700 million between 2026 and 2028. Revenue is expected to grow from $185 million in 2028 to $924 million in 2030, a compound annual growth rate of 123%.
Despite that projected growth, the company is not expected to reach positive earnings before 2030. UBS estimates the market is currently pricing in $124 million of 2028 EBITDA, compared to the firm’s own forecast of just $29 million.
That gap between market expectations and UBS’s numbers is at the center of the downgrade call. The new $6 price target implies roughly 40% downside from current levels.
Windham also flagged limited progress with the Tennessee Valley Authority and setbacks with the RoPower project as risks that could widen the gap between investor expectations and actual results.
Valuation Running Ahead of Fundamentals
The selloff also reflects broader investor concern that NuScale’s valuation had run ahead of its commercial reality. The company has a tiny revenue base and no binding power purchase agreement in place.
NuScale does hold regulatory clearance and has advanced design work, which could be an advantage when utilities and data center operators begin selecting small modular reactor suppliers.
But for now, the story relies on winning major contracts and securing financing. Any delays in turning its technology into paid projects could add further pressure on the stock.
Year to date, SMR is down 23.71%. Average daily trading volume sits at around 32 million shares, and the technical sentiment signal currently reads Sell.
The stock’s current market cap stands at approximately $4.8 billion.
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