Oklo (OKLO +8.14%) a nuclear energy stock that has been popular amid something of a revival of interest in its industry, suffered a setback on Monday. On concerns that it has yet to prove itself as a long-term viable business, essentially, an analyst downgraded his recommendation on the shares.
The market as a whole obviously took this to heart, and ended up trading the stock down by 5% on the day. Other titles fared much better, as the bellwether S&P 500 (^GSPC +0.80%) rose by 1% that trading session.
Diminishing power
That morning before market open, Craig-Hallum's Eric Stine pulled the switch on the downgrade. Oklo now, for him, is only a hold, at a price target of $59 per share. He previously flagged the stock as a buy.
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According to reports, the crux of Stine's justification for this is that Oklo, which develops and operates next-generation nuclear-generating facilities, needs to make further progress. Management has been very ambitious in its anticipated timelines, and Stine believes it might not meet such projections.
Oklo has stated that it intends to deploy its first nuclear power-generating facility in Idaho by the end of 2027 or early 2028. However, the analyst pointed out that it hasn't completed a proper application to be licensed by the U.S. Nuclear Regulatory Commission.
NYSE: OKLO
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Reasons to be cheerful
Those concerns are valid, certainly, but Stine also wrote that Oklo has notched some very tangible wins, not least its recent securing of a notice of intent to award (NOITA) from the Department of Defense for a project on an Alaska Air Force base.
That alone, in my view, makes Oklo a stock to watch just now. We should also bear in mind that nuclear is a form of energy generation very much in favor with the current presidential administration, and should therefore enjoy support from the highest levels of federal government.
