Power generation company BWX Technologies Inc BWXT was accorded the top notch rating by an analyst at Seaport Global, as he sees a path to well over $100 for the shares of the company.
The Analyst
Seaport Global analyst Josh Sullivan initiated coverage of BWX Technologies with a Buy rating and $72 price target.
The Thesis
BWX Technologies shares have benefited from Navy build schedules, although the next big catalyst for the company is the "underappreciated" medical radioisotope market, Sullivan said in a Wednesday note. (See the analyst's track record here.)
The medical radioisotope process developed by BWX is "potentially a $1 billion product," Sullivan said. With the analyst's price target of $72 based solely on the company's core business, Sullivan said he sees a path to well over $100 if the company can snag even one-third of the isotope opportunity.
About 80 percent of the BWX portfolio originated in the nuclear operations segment, which is the sole supplier of nuclear reactors for submarines and aircraft carriers to the Navy, according to Seaport Global.
"Further, BWXT's acquisition of GE Hitachi doubles the nuclear commercial presence in Canada, where 10 reactors are due for refurbishment," Sullivan said.
Despite the recent Westinghouse acquisition reflecting the interest in the space, the company is not a nuclear power renaissance play, the analyst said.
The Price Action
Shares of the company are up over 54 percent over the past year, reflecting an improving outlook for some submarine and aircraft builds.
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