Shares of NuScale Power Corporation (SMR -3.65%) surged 8% through 10:20 a.m. ET Friday after investment bank CLSA initiated coverage of the stock with an "outperform" (i.e., buy) rating and an $11 price target on the $9 stock.

If CLSA's right about that, NuScale investors stand to earn 18% profits over the next year -- on top of today's gain.

What CLSA said about SMR

And yet, if CLSA is optimistic about NuScale stock, it has a funny way of showing it. Commenting on StreetInsider.com this morning, CLSA warned that NuScale depends on support from nuclear power plant builder and NuScale parent company Fluor Corporation to cover its operating losses, which are expected to continue for at least "several years."

The company will also need to win government grants in the form of "DOE cost-share programmes" to cover its losses. And even then, CLSA anticipates NuScale will need to sell stock and dilute shareholders through an "ATM Programme" of share sales.

All things considered, CLSA doesn't see SMR stock turning profitable before 2028.

Is NuScale Power stock a sell?

So, why does CLSA like NuScale now if it's not expected to turn a profit until four years from now? Presumably, because by the time NuScale does turn profitable, its stock price will be much more expensive -- but only time will tell whether CLSA's right about that.

In the meantime, investors should anticipate that NuScale's stock price will be "sentiment-based" and driven primarily by headlines, such as the company's receipt of "regulatory approvals," its successful implementation of "proofs-of-concept" for its small modular reactor designs, and "customer interest" (i.e., contract announcements).

I'm not saying NuScale will fail in all of the above, but it does sound to me like the stock is extremely speculative. Deeply unprofitable today and selling for more than 50 times revenue, NuScale stock should make up only a small percentage of an individual investor's portfolio -- if you give it any percentage at all.