On Friday, Citi reaffirmed its Neutral stance on Oklo (NYSE:OKLO) stock, maintaining a price target of $11.00. The focus was on the potential of Small Modular Reactors (SMRs), particularly given the rising demand from datacenters.
Oklo's Aurora powerhouse unit's economics received a positive outlook due to its quick cash flow ramp-up and the added net present value per reactor. However, concerns were raised about the possibility of higher capital expenditures, the Nuclear Regulatory Commission (NRC) process, and the availability of fuel.
The design of Oklo's powerhouse, the initial fuel supply from Idaho National Lab, a streamlined NRC process through the Combined License Application (COLA), and staff with NRC experience were cited as risk mitigants. Key developments for Oklo include the progress on pre-application readiness and the extent of ongoing discussions.
TerraPower, a competitor in the space, has completed extensive pre-application work, with over 60 meetings held, and is optimistic about obtaining a construction permit from the NRC. The company has initiated construction on the non-nuclear aspects of its approximately $4 billion reactor project in Wyoming, expected to be operational around three years following the deployment of Oklo's first plant.
Investors asked several questions regarding Oklo and its industry positioning. Queries ranged from the impact of TerraPower's progress and permit approval to Oklo's strategies for managing rising fuel costs and the timing of shareholder lockup expirations.
Other inquiries touched on the anticipated timeline for Oklo's application filing, deployment, the effect of reactor size on the regulatory process, potential bottlenecks in interconnection or transmission, the historical performance of sodium-cooled fast reactors, and what catalysts to look out for that could affect Oklo's stock.
Comparatively, TerraPower's 345MW reactor is significantly larger than Oklo's proposed 15MW to 50MW plants, which aim to serve industrial and commercial customers through direct power purchase agreements.
TerraPower's model also includes an energy storage system capable of supplying up to 500MW of peaking power for over 5.5 hours. While TerraPower anticipates its reactor to be operational by 2030, Oklo is expected to deploy its first plant earlier.
In other recent news, Oklo Inc., a company known for its advanced fission reactors, has been given a neutral rating by Citi, which also set an $11.00 price target on Oklo's shares. Oklo's innovative approach, focusing on accelerated construction times and an owner/operator model, has positioned it uniquely within the market.
A significant aspect of this development is Oklo's business strategy, tailored to the datacenter market with a compact reactor design. The company has secured a robust order book, indicated by a strong lineup of letters of intent (LOIs). Oklo has also procured the necessary fuel for its inaugural facility and has sufficient liquidity to commission the plant by 2026/2027 without requiring external capital.
However, Citi analysts have highlighted several challenges Oklo faces, including regulatory hurdles, technological and execution risks, and concerns related to fuel procurement and management. The company's progress in overcoming these challenges will be closely monitored before a more positive stance is adopted towards Oklo's stock.
InvestingPro Insights
As investors evaluate Oklo's position in the burgeoning SMR market, real-time data from InvestingPro provides a deeper financial perspective. Oklo's market capitalization stands at approximately $1.1 billion, indicating investor confidence despite the company's current lack of profitability. The Price to Earnings (P/E) ratio, a metric often used to gauge a stock's valuation, is negative at -0.87, reflecting the company's earnings challenges. However, the substantial 25.54% price return over the past month suggests a strong short-term investor sentiment, which aligns with Citi's maintained price target of $11.00.
InvestingPro Tips highlight that Oklo operates with a moderate level of debt and has liquid assets surpassing short-term obligations, which could provide some financial stability as it navigates the capital-intensive process of bringing its SMR technology to market. Additionally, it's worth noting that the stock has demonstrated a strong return over the last month, which may capture the attention of momentum investors. For those considering a deeper dive into Oklo's financials and future prospects, InvestingPro offers additional tips and insights. To enhance your analysis, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 8 more InvestingPro Tips available, investors can gain a comprehensive understanding of Oklo's financial health and market position.
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