Why Is NANO Nuclear Energy Stock Soaring On Friday?

NANO Nuclear Energy Inc. NNE shares are trading higher on Friday after Benchmark analyst Michael Legg initiated coverage on the stock with a Buy rating and announced a $15 price target.

Nano Nuclear Energy is a pre-revenue company focused on the nuclear SMR sector.

It aims to manufacture small/medium reactors (SMRs) and develop a supply chain, including consulting, fuel fabrication, and delivery of High-Assay Low-Enriched Uranium (HALEU).

The analyst says the stock will benefit from growing awareness and demand for SMRs as their safety and applications gain public acceptance, especially with climate change initiatives favoring emission-free energy.

The analyst adds that despite a 40% rise in electricity consumption over 30 years, U.S. nuclear capacity has remained stagnant, according to the World Nuclear Association. Currently, there are about 400 GWe of nuclear power globally.

The analyst writes that NNE's units provide 1.5 MWe, which could power 1,000 homes for 20 years. Most new reactor growth is expected to come from SMRs.

Legg estimates that NANO Nuclear will need $200 million in capital expenditure to complete its manufacturing buildout by 2029.

The analyst says that the company is well-positioned to secure government funding from various initiatives, including $770 million from the Inflation Reduction Act for advanced nuclear fuels and $250 billion in DOE loans.

Leff modeled for gross margins exceeding 40%. "We believe the price for SMRs will initially top out at over $40 million and steadily

decline in price as economies of scale and operating efficiencies are incorporated," the analyst wrote

Price Action: NNE shares are up 16.01% at $8.20 at the last check on Friday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo by metamorworks via Shutterstock