It has been a rough year for NuScale Power (SMR 2.91%) investors. Since 2026 began, shares of the nuclear energy developer have fallen by roughly 40%.
One Wall Street expert, however, thinks the best is still to come. George Gianarikas, a veteran analyst at Canaccord Genuity, thinks NuScale stock has 195% in upside from its current deflated price. He's not alone. Three other analysts in a list compiled by TipRanks.com also believe NuScale stock has at least 100% upside potential over the next 12 months.
Why is Gianarikas so bullish? Let's find out.
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Here's why analysts are so bullish on NuScale Power stock
Gianarikas isn't excited about NuScale Power stock for any one reason. In his view, there are multiple factors lining up right now that should benefit NuScale's business and its stock price.
Gianarikas is particularly excited about NuScale's partnership with ENTRA1 and TVA. This partnership aims to build a 6-gigawatt small modular reactor (SMR) somewhere on the eastern U.S. coast. According to reports, Gianarikas sees this project as "a transformative opportunity that could significantly accelerate NuScale's path to commercialization and scale."
I am also excited about this project. To me, it represents NuScale's best opportunity to get one of its SMR nuclear systems into commercial operation. That's because NuScale's CEO expects to sign a power purchasing agreement by the end of 2026, formally committing the utility to buying power from NuScale's facility, perhaps for decades to come.
Gianarikas is also bullish on NuScale's Romanian SMR system. This project recently received critical approval from Romanian regulators, which caused some excitement. However, I'm not attributing much value to this opportunity. The Romanian project has faced several costly delays over the years, and by some estimates, the project won't be commercially viable until 2033 or 2034.
NYSE: SMR
Key Data Points
Perhaps most critically, Gianarikas apparently uses a 5% terminal growth rate for his model that estimates the value of NuScale's stock. Most analysts don't forecast a company's financials indefinitely. Often, only a small handful of years are modeled in any detail. Analysts then apply a flat growth rate that extrapolates the final prediction year into perpetuity.
Because this flat growth rate extends indefinitely, even small changes to the assumption can have huge effects on the final valuation estimate. Terminal growth rates are often set between 2% and 4%, trying to mimic expected inflation or gross domestic product growth rates. A 5% terminal growth rate is generally considered aggressive.
To be sure, NuScale has a massive long-term growth runway. This is the type of business that could reasonably warrant an elevated terminal growth rate assumption. But investors should understand that Gianarikas' bullishness doesn't just stem from NuScale's cheap stock price. It's also a factor of aggressive assumptions for the company's growth trajectory.
