On Friday, Citi reaffirmed its Neutral rating on Oklo shares (NYSE: OKLO), maintaining a price target of $11.00. The firm's analysis underscored investor enthusiasm for the Small Modular Reactor (SMR) market potential, particularly due to increasing demand from data centers. Oklo's Aurora powerhouse was noted for its favorable economics, including a quick cash flow ramp-up and the added net present value per reactor.
The report acknowledged concerns about the potential for higher capital expenditures, the regulatory process with the Nuclear Regulatory Commission (NRC), and the availability of fuel.
Nevertheless, it pointed out several risk mitigation factors for Oklo, such as the inherent design advantages of the powerhouse, the initial fuel supply sourced from Idaho National Lab, a streamlined NRC process through a Combined License Application (COLA), and the company's hiring of employees with prior NRC experience.
Looking ahead, the key developments for Oklo include advancements in its pre-application readiness and the extent of its ongoing discussions.
In comparison, TerraPower, which is also active in the SMR space, has engaged in extensive pre-application work with the NRC, including over 60 meetings. The company expressed confidence in obtaining a construction permit from the NRC. TerraPower has begun work on the non-nuclear parts of its approximately $4 billion reactor project in Wyoming, which is expected to commence operations about three years following the launch of Oklo's first plant.
InvestingPro Insights
As Oklo shares (NYSE: OKLO) maintain investor interest, real-time data from InvestingPro provides a deeper understanding of the company's financial health and market performance. With a market cap of $440.68 million, Oklo's significant price volatility is reflected in a 1-week price total return of 62.43% and a staggering 1-month price total return of 294.3%. Despite these impressive short-term gains, the company's long-term profitability remains uncertain, as highlighted by a negative P/E ratio of -64.05 and an operating income of -$6.95 million over the last twelve months as of Q1 2024.
InvestingPro Tips suggest that while Oklo holds more cash than debt, indicating a strong balance sheet, the stock is currently in overbought territory according to the RSI. This could signal a need for caution among investors. Additionally, Oklo's high Price / Book multiple of 157.32 points to a valuation that may be considered steep relative to the company's book value. For investors looking to navigate these complexities, InvestingPro offers additional tips and insights. There are 13 more InvestingPro Tips available, providing a comprehensive analysis of Oklo's financials and market performance. Interested readers can use the exclusive coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, further enriching their investment strategy with valuable data and expert insights.
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